Manappuram, Muthoot crash 8-10% on falling gold prices

Gold loan financing companies Manappuram Finance and Muthoot Finance crashed 8-10 percent in early trade on Tuesday due to fall in gold prices.

Gold prices dropped more than 8 percent on Monday to below USD 1,400 an ounce, heading for the biggest two-day drop in 30 years.

Overall, gold is down 20 percent in 2013, and nearly 30 percent from its all-time trading highs over USD 1,900 per ounce in September 2011.

Currently, gold is down by USD 10.74 or 0.7 percent to USD 1,349.86 an ounce.

Another setback for Manappuram Finance
The Economic Times reported that private equity investors in gold loan firm Manappuram have stepped in to bar the Kerala-based lender from using its branches to accept money for chit funds controlled by its promoter VP Nandakumar, after an audit indicated that a part of the company's network was being used for this, a senior fund manager of a private equity fund said.

The report said, "Private equity firms led by India Equity Partners and Barings Private Equity Partners assigned audit firm KPMG, which found out that less than 5 percent of the company's branches were collecting money from the public for chit funds controlled by Nandakumar."

At 09:56 hours IST, Manappuram is locked at 10 percent lower circuit to touch a 52-week low of Rs 15.70. There were pending sell orders of 291,343 shares, with no buyers available.

The stock declined for the fourth consecutive session today, losing 21 percent since April 10.

Meanwhile, Muthoot Finance fell 7.5 percent to Rs 121.55 on Bombay Stock Exchange. The stock plunged 32 percent in seven consecutive sessions.