Mahindra & Mahindra Financial Services has received SEBI approval to set up a mutual fund arm. Speaking to Bloomberg TV India, Mahindra Financial Managing Director Ramesh Iyer said all the MF products will possibly have a touch of innovative design that suits the rural cash flows.

Last year was a great time to start an asset management company. But this year has proven to be volatile. What are your plans?

I think it is important to look at these businesses not just from a very short-term prospective but as a long-term opportunity. We are very semi- urban and rural focused, and the products of this nature for our investment prospective from the rural market, I guess, are very important. We do believe rural will grow and, as we go along, there will be surpluses generated and there have to be many more investment products available. That has been our strategy. We look at it as a real long-term play and not really much worried about what is happening in the short-term.

How are you going to go about setting this up? What is the background that you have done? As you are going to really focus on the rural high-end income?

Clearly, the answer is yes. We are going to look at rural as our key strength of growth. But given our Mahindra Group ecosystem and the brand image that we enjoy, we will also look at the possibilities from an urban centre prospective — managing surplus funds from the group as well as from outside the group. So the ecosystem will also be another piece to look at.

So, as far as the corpus is concerned, currently we are putting the capital as required by the regulator. But going forward, I don’t think capital is going to be a constraint for growth. We will for sure allocate capital as much as we require depending on the potential. We have a 4 million customer base and we know for sure that our very attractive products, if designed well, approved and introduced in the market, can actually create a new market place. So in all our products you will possibly see a touch of innovative design that suits the rural cash flow, and that is going to be our direction.

You are up against some big players in the business and they have only become bigger over the last year. You are entering the segment that already sits over ₹13.4 lakh crore in terms of AUM and we see strains of consolidation within that. How will you mark your niche?

I want to be extremely clear that we are not going to be one more in that group of players.

Instead we are going to be very different from everyone else because I don’t think there are any players going to focus so much on rural India and all our businesses are from that pocket. We know it is not a rush in a short-term play but we have the patience. We will introduce products, go deeper into the geography and we believe that rural India has future for growth and the surplus from that market will get channelised through these programmes.

So we are clear in our mind that while in the industry we are one more player you will see us as a very different player from that perspective.

We will be innovative in designing the product, providing services to the customer. And I guess that will make us different from others.

What is the potential over there when there is stress — of two years of bad monsoon, with the rural economy under lots of pressure?

We have been working in that market for the past 20 years. So there will be times when you go through these types of pressures. But one has to factor all of this in the strategy. I don’t think we made a strategy to say that every month there will be a growth story. There will be such pressures many a times.

But that is where the strength of organisation and group counts. It is going to be more and more about understanding of customer needs, and then your ability to reach to the customer either through technology or physical presence and then design products that suits the customers and their cash flow. And that will make us look different out there.

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