Firm views good monsoon, bountiful harvest as positives
Cholamandalam Investment and Finance Co. Ltd. (CIFCL), the Murugappa Group’s financial services arm, plans to maintain a strong focus on the rural economy by stepping up financing for tractors.
The NBFC’s move follows faster recovery of the rural sector and a good Rabi harvest. CIFCL is banking on the good monsoon, higher cropping and government support to impart a positive growth trajectory to the tractor industry, which it expects will post 10% to 15% growth in the current fiscal, it said in an investor presentation.
With more than 80% of its branches located in rural and semi-urban areas and towns, the company can capitalise on the uptick in rural demand, it added.
As 73% of its business portfolio comprises vehicle financing, CIFCL would continue to focus on financing light commercial vehicles (LCVs), passenger vehicles and two-wheelers. Tractor financing represents 10% of the total portfolio, vehicles 27%, LCVs 35%, cars 10% and two and three-wheelers 5% among others, the company said in its presentation.
On LCV financing, it said the uptick in demand would help CIFCL garner increased market share owing to its presence in rural areas.
CIFCL is one of the largest players in the used vehicle financing business with a disbursement mix of almost 30% in this space. “This will enable us to cater to this segment effectively and generate disbursement volumes during these challenging times,” it said.
As of December 2020, about 22% of disbursements was made towards loan against property and SMEs and home loan 5%.
Stating that disbursements were expected to pick up in the fourth quarter with revival of MSME business activities across India, the company said the primary focus would be on tier 2, 3 and 4 cities.
The NBFC subsidiary Cholamandalam Home Finance Ltd (CHFL) has made an application to National Housing Bank for registration as a housing finance company in June 2018. It is also awaiting RBI’s nod to operate as a housing finance company.
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