The Hindu Business Line : Tata Motors' new finance arm to up branch count to 500 by 2010

Tata Motors's newly established 100 per cent subsidiary TML Financial Services is set to increase the company's existing chain of 150 Tata Motorfinance branches to 500 branches by 2010.

The expansion is on the lines of the product expansion that its parent company Tata Motors will launch in 2008. Furthermore, being a non-banking finance company, the company will explore the possibilities of offering other finance products such as insurance, mutual funds, etc in the near future, said Mr Aubrey Rebello, Managing Director, TML Financial Services.

The new company is to support and enhance the vehicle finance activities of Tata Motor Finance. The parent company used the brand `Tata Motorfinance' through which all the finance activities were carried out before. Now, most of them will be booked by the new company though some will continue to be booked by Tata Motors, said Mr Rebello.

Revenue up

Tata Motorfinance clocked a total revenue of Rs 5,500 crore in 2005-06, a 60 per cent increase over Rs 3,400 crore in the previous fiscal. During the period, it accounted for 23.8 per cent of Tata Motors' domestic sales.

It has been financing Tata Motors vehicles (passenger and commercial vehicle range) and construction equipment vehicles and recently due to the Tata-Fiat alliance, it extended its activities towards the Fiat range of vehicles too.

Raghuvir Srinivasan from Chennai reports:

A year after it ceased to exist — it was amalgamated with Tata Motors with effect from April 1, 2005 — Tata Finance has been reborn as TML Financial Services Ltd, a wholly-owned subsidiary of Tata Motors.

TML Financial Services will, henceforth, "support and enhance the vehicle financing activities of Tata Motorfinance" says the press release from Tata Motors. What this probably means is that the new company will be responsible for the business of vehicle financing and also growing it.

Tata Motorfinance is a division of Tata Motors, which finances vehicles sold by the company.

Despite financing only Tata Motors' vehicles, Tata Motorfinance is the third largest vehicle financier in the country. In 2005-06, Tata Motorfinance financed 96,247 vehicles, which is a fifth of all vehicles sold by Tata Motors.

The financing division has experienced high growth in recent times — number of vehicles financed has grown by a compounded rate of 46 per cent per annum over the last three years.

During 2005-06, the division disbursed Rs 5,479 crore to finance Tata Motors' vehicle buyers.

The hive-off of the division into TML Financial Services appears to be part of preparations ahead of the expected launch in 2008 of the Rs 1 lakh car by Tata Motors.

One of the most important mandates for the new subsidiary could be to expand quickly across the country in order to be in a position to finance the new car when it hits the market.

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