The Lede
Workers strike outside Muthoot Finance
Workers strike outside Muthoot Finance

Is Muthoot Finance closing its units in Kerala?

Elamaram Kareem, Kerala CITU general secretary, said that Muthoot Finance is spreading lies

Rejimon Kuttappan

When rumours are doing rounds in Kerala that Muthoot Finance will wind up its operations in Kerala from September 02 due to CITU-backed strike, the financial institution has made an announcement at Bombay Stock Exchange and has come out with a notice to its customers in news dailies stating that Left unionism is affecting their operations.

The notice published in certain news dailies state that many of its branches in Kerala remained closed since August 20 because of the indefinite strike declared by a small segment of their employees with the support of CITU.

CITU has been holding an indefinite strike in front of Muthoot branches in Kerala from August 20.

"Forcibly Closed"

Meanwhile, in a filing at Bombay Stock Exchange, Muthoot Finance states that though large majority of our employees are not part of this strike, they are unable to open branches because of the threats of forcible closure.

“Our staff is being threatened for life if they open branches. These threats are made by CITU workers which is the affiliate of Communist Party of India-Marxist (CPI-M), the current ruling party in Kerala. Some of the staff who dared to open the branches were threatened/physically assaulted leading to forcible closure of branches by CITU workers.

Out of 623 branches in Kerala, 265 were opened for transactions today (Aug 29) of which 15 branches have been forcibly closed. Yesterday (Aug 28), 224 branches were opened for transactions of which 47 were forcibly closed,” the filing read.

The notice published in news daily adds that due to similar strikes during the last three years, the share of business contributed by the branches of Kerala has fallen from 11% to 4%.

“However, the performance of 3,900 branches outside Kerala has helped them to get 50 % more business, i.e from Rs 24,000 cr to Rs 36,000 cr,” the notice read.

Stating that Muthoot Finance is on a growth trajectory even now, except in Kerala, the financial institution adds in the notice that during the last one financial year alone, the company had paid income tax amounting to Rs 1200 crore.

“Spreading Lies”

Meanwhile, Elamaram Kareem, Kerala CITU general secretary, said that Muthoot Finance is spreading lies.

“CITU is not holding any strike in Muthoot Finance. It is a Non-Banking and Private Finance Employees Association, which is affiliated to CITU, who are holding the strike. That is it. Many other financial institution employees are also members of this union. However, Muthoot Finance is trying to portray a picture that CITU is holding the strike and destroying the institution,” Kareem said.

“Some three years ago, the Muthoot Finance employees formed a union and got affiliated with us. The financial institution was not having a proper pay structure, human resources guidelines, annual increment system and all. Even though talks were initiated and when they were ignored, a few workers resorted to peaceful protests. But they were penalised. Those who stood for rights were transferred,” Kareem said.

According to Kareem, exploitation and harassment, like slashed pay scales for workers who participate in strikes, by the management was turning worse. As a result, strikes were intensified.

“Recently, a talk was also held with State Labour Commissioner. The management had sent only representatives who are not capable to take decisions. And the talks failed without any positive outcome. Even a court was ready to mediate upon a plea submitted by the management. From there too, they walked away with disagreement,” Kareem said adding that a strike was announced following all rules and the management threatening that they will shut down all their units in Kerala leaving the workers stranded is not going to happen.

However, in the notice, Muthoot Finance states that employees in the company are paid salaries as much above the minimum wages prescribed by the government.

“In addition to provident fund, ESI, medical health insurance, national pension scheme and other benefits and further eligible employees have been given the company’s shares worth Rs 630 per share at Rs 10 and Rs 50 under ESOP,” the notice added.

Rs 350 Per Day

Meanwhile, a striking worker, on condition of anonymity told The Lede that per day salary is Rs 350.

“Can we meet any kind of expenses with the income? Additionally, we don’t get any health insurance coverage or anything. And if we join a union to protect our rights, then we will be in the bad books of the management. We will be penalised then for that,” the worker said adding that the company is doing well financially but were reluctant respect their rights and provide them a decent pay.

“Financially Sound”

According to a filing at BSE, the Muthoot Finance Ltd Consolidated Loan Assets under management achieved a YoY increase of 18% at Rs 40,228 crore as against last year of Rs 33,954 crore.

During the quarter, Consolidated Loan Assets under management increased by 5% at Rs 1924 crore. Consolidated Profit after tax achieved a YOY increase of 9% of Rs 563 crore as against last year of Rs 518 crores.

Muthoot Finance Ltd (MFIN), the largest gold financing company in India in terms of loan portfolio, registered an increase in net profit of 8%, at Rs 530 crore for Q1 FY20 as against Rs 492 crore in the previous year.

Loan Assets stood at Rs 35,816 crore as on June 30, 2019 as against Rs 30,997 crore on June 30, 2018, a YoY growth of 16%.

During Q1 FY20, Loan Assets increased by Rs 1570 crore.