The Hindu Business Line : Cholamandalam to tap partner's expertise for consumer finance

CHOLAMANDALAM Investment and Finance Co Ltd (CIF) plans to enter the consumer finance segment in a big way, courtesy its recent tie-up with Singapore's DBS Bank. It intends to tap the expertise gained by its overseas partner on this front.

The company expects to augment its retail assets. The plan that has been outlined includes automobile financing as well.

CIF, according to Mr M. Anandan, Managing Director, hopes to offer personal finance and home loans, both of which enjoy good potential for growth. These will help the company to diversify into newer areas. As much as 80 per cent of CIF's business - its balance sheet size is about Rs 2,000 crore at the moment - is on account of commercial vehicle funding.

CIF is looking at an annual growth of 15-20 per cent in new products, despite the competition that other players, banks included, will provide.

For the record, the tie-up (signed in mid-June) will allow DBS Bank and the Murugappa group to become equal shareholders (37.5 per cent each) in CIF. The Indian group, which has diversified interests, owns 55 per cent of CIF chiefly through Tube Investments of India. DBS will bring in over Rs 200 crore.

The Chola group's asset management and securities broking businesses will also bear the DBS mark. The latter, it is pointed out, will enable the Indian company to re-brand itself in a certain manner.

"DBS, the largest player in the banking space in Singapore, operates in Asian markets similar to that of ours. For us, this will be a cultural fit," Mr Anandan said, while referring to the Singapore outfit's operations in countries such as Thailand and Malaysia. In Thailand, DBS runs a joint venture NBFC.

CIF has created teams of personnel to oversee the integration on several fronts - IT, HR and marketing. The company is now wrapping up an open offer by DBS, which is being managed by DSP Merrill Lynch. This, it is felt, will be over by September.

Nearer home, CIF is eyeing organic growth, without recourse to acquisition of portfolios of other NBFCs. Securitisation will also help it to move ahead, it is felt.

Meanwhile, group venture Cholamandalam MS General Insurance, into its third year of operations, is set to close this fiscal with a business of Rs 300 crore, up from the Rs 175 crore recorded last year. Breakeven is expected shortly, according to Mr Anandan.

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