The Hindu Business Line : Mahindra Finance ties up with HPCL

Mr S. P. Chaudhry (left), Executive Director (Retail), HPCL, and Mr Bharat Doshi, Executive Director, Mahindra & Mahindra Ltd, at a press conference in Mumbai on Tuesday. - Paul Noronha

Mumbai , Oct. 4

MAHINDRA & Mahindra Financial Services Ltd (Mahindra Finance) and HPCL today announced a tie-up whereby the finance company would get access to HPCL's rural distribution network to sell value-added financial products.

The tie-up is expected to offer many strategic opportunities to both companies. Benefits to HPCL include credit being extended to its customers and better utilisation of space at its outlets through Mahindra Finance opening branch offices.

"It will also lead to an increase in customer traffic at HPCL outlets and result in additional sale of petrol, diesel and other oil products at these outlets," an official statement said.

Mr Ramesh Iyer, Managing Director, Mahindra Finance, and Mr Tejbir Singh Sawhney, Deputy General Manager (Highway Retailing), HPCL, signed the agreement in the presence of Mr Bharat Doshi, Executive Director, Mahindra & Mahindra Ltd (M&M), and Mr S.P. Chaudhry, Executive Director (Retail), HPCL.

To start at `Hamara Pumps': Mr Iyer told newspersons that Mahindra Finance would start its operations under the tie-up at HPCL's `Hamara Pumps' in the rural areas of Maharashtra and Gujarat. Within a month the company hopes to have a presence at all such outlets nationwide.

Outlet expansion: HPCL currently has 460 low-cost rural retail outlets fashioned as composite units offering fuel and inputs for farmers. It plans to quickly add another 500 outlets, taking the total to nearly 1,000.

Mr Chaudhry said that the chosen retail model was attractive with break-even happening at monthly fuel sales of 30 kilolitres. Most of these outlets average 80 kilolitres. HPCL plans to relax the minimum required sales to 50 kilolitres.

Mr Doshi said that the tie-up was a result of pursuing schemes of co-location so that the farmer gets whatever he wants at one location. "This is adding finance to fuel and fuel to finance."

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