GOING TO OFFICE AS A 10-YEAR-OLD WAS NOT A CHORE, SAYS MUTHOOT FINANCE MD GEORGE MUTHOOT

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He started attending office as a 10 year-old. Perhaps, 60-year-old George Alexander Muthoot, MD, is the oldest employee in terms of longevity and experience at Muthoot Finance. He belongs to the 127-year-old Kerala-based Muthoot group which started out as a chit fund-based business to a diversified portfolio that includes gold, finance, hospitality, real estate among others. A brilliant student and a gold medallist who topped the state in his B.Com and CA examinations, Muthoot reflects on what goes into making any business a success and the underlying strength of family ties and relations.

Excerpts from the conversation:

You started out as a child working in the family business firm. Wasn't there any sort of irritation for being forced to go to an adult world?

If you ask the question the way you have, the answer would be, yes! At times one felt that. I started going to office with my brothers and sisters, when I was around 10 years old. We were there for an hour or two. After reaching office, I was engrossed in doing whatever tasks I could do at my age -- be it sticking stamps on envelopes or accompanying the peon to the post office. Skipping office was not an option. Sundays were our off days. However, we did not find going to office a terrible chore. We realised quite early that we had a family business and saw our father and uncles working together. Our parents were keen that we learn what we could about the business from the grassroots.

What would you term as lessons from that early initiation to work?

We learnt that it pays to be thorough in whatever we do. We learnt to value everything, even as children. If we picked up a calculator, we were told its use and encouraged not to play with it. The one lesson that comes through is that hard work is essential. This has to be accompanied with perseverance and quick decision-making powers.

Was studying to be a CA a choice you made or was that a family suggestion?

Not at all. But it was shaped by what I saw around me at the workplace. I have seen my parents spend hours with their CA. I understood quite early the importance of accounts and the critical role of a chartered accountant. Taxation issues were a hurdle way back in 1971 -72.

Do you recall anything distressing about people pledging gold?

I have never heard of a distress transaction with regard to gold, neither in my growing-up years or later. You pledge your gold for the sake of an urgent loan. Usually in those days the loan was sought to pay for a visa or a plane ticket to the Middle East. Gold is the easiest collateral available and it was far easy to avail of money against it than apply for a bank loan. Banks typically used to avoid small ticket transactions then.

Have the reasons for pledging gold changed over the years?

Yes, it has. With changing times, people's needs have changed, too. With bank loans easily available now, I find that our customers are those who want to build or buy a house. Loans for visas and plane tickets are a thing of the past.

What were the challenges you had to face once you took charge?

The challenges for us at Muthoot began when the economy opened up. That was a time of intense competition, but it also opened up newer and exciting opportunities. Business processes that were being followed for decades until then had to be revisited as the landscape had changed. I would think most companies until had a 20-year business plan. With the economy opening up, it was changed every five years. I think now the business models need to be changed every three years, else you will be outdated. The demands of the market and the market itself are changing very rapidly. Earlier, loans were taken for personal reasons and now a large chunk of it is availed for business purposes.

What are your future plans for the firm?

We are in the process of expanding to new geographies. We have a gold loan firm in Sri Lanka with 50 percent share holding. Presently our gold portfolio is Rs 24,000 crore and we hope to scale it to Rs 26,000 crore soon. We are getting into the realm of housing finance and are looking at a niche customer base. Our gold customers could be the potential customers here as well. We have at any given time Rs 60 lakhs of gold loans. Our emphasis is on affordable housing. We are not here to compete with the SBIs or any similar entities in that space.

With falling gold prices, are the cases of NPAs on the rise?

We haven’t experienced that. An NPA for us is that which a customer does not take back and is left with us for a period of 18 months or more. When a customer does not pay the interest or loan, we get in touch with the individual. If we don’t get a response after that, we auction the gold. Probably, just one or two percent of our gold loans go for auction. When it is auctioned, we may have to take a cut on the interest but this situation is rare.

You had applied for a licence for payments bank

Yes, but we did not get it this time. We are hoping to get one soon. We would like to move into the money transfer space.

Is life still about work?

My philosophy is: Early to rise and early to bed. I wake up at 5.30 am. I work for 7-8 hours at the office. But I also do other things besides work. I play badminton at a club for at least 20 days a month. The family goes out on holidays. When we plan our holidays, I prefer to go to new places that I haven't seen or been before. Another hobby is reading. I love to read fiction. I pick up books that have been recommended by friends or are on bestseller lists. But, I have no favourite authors as such.