That is the main business in terms of lending to infrastructure. Going forward, we will also participate in terms of infrastructure advisory through the investment banking arm. We would use both lending as well as the advisory divisions in the infrastructure projects.

How do you propose to choose your SME universe?

Our strategy is to use the Tata ecosystem. If you look at the key Tata companies which are in operation today, we are in almost all the sectors; this itself provides a huge opportunity. We have vendors of raw materials, component suppliers, service providers, dealers and other distributors and most of our partners (Tata companies) have, in their own right, significantly healthy businesses with many of them growing in India as well as internationally. These companies offer us business opportunities not only in the form of lending (working capital, capital purchases and project financing) but also in future capital raising via capital market or private equity , and mergers and acquisitions for our investment banking arm.

Are you primarily looking at the Tata group companies for your business?

Initially yes, but we are also looking at other companies. The advantage of looking at companies inside Tata ecosystem is that it gives us industry knowledge; it also gives indirect control over these companies. If something goes wrong with these companies we can use the knowledge base and relation base of the operating companies.

What are your existing spreads and also the spreads on the new disbursements, given the 12 per cent rate at which you are raising funds?

I can only say that we make a good spread. The 12 per cent rate of interest may look expensive but we have certain products in retail business as well as SME and infrastructure with competitive net interest margin comparable with banks or other NBFCs. This issue is basically meant for the retail investors who could be tapped in future for fee-based income services. We can approach them for selling mutual fund products, insurance products or equity broking product or any other cross-selling. This also gives us a good data base which we can tap in future for raising the money. Being a new company we are building our brand by targeting retail customers. What is the history of Tata Capital?

We have Tata Motor Finance in the group, which finances the vehicles manufactured by Tata Motors. Tata Capital was in the drawing board stage from the start of December 2006. So we thought we will use the platform of Tata Motor Finance to build this SME and infrastructure business. Two years ahead of starting Tata Capital, we had already started SME and infrastructure finance on the books of Tata Motor Finance. When Tata Capital was started in September 2007, we transferred the asset portfolio of around Rs 1,250 crore from Tata Motor Finance to Tata Capital.

One year down the line, at what rates will you expect to raise NCD at?

We expect the rates to fall and if we have to raise it next year we might offer a high single digit coupon rate. Inflation rate will also play a major part.