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Murugappa Group’s NBFC, Cholamandalam Investment and Finance Company (CIFCL), hopes to maintain its strong growth in the vehicle finance segment, revive the home equity business, and achieve significant growth in housing loans this fiscal.
With 870 branches located across India and a strong relationship with all original equipment manufacturers (OEMs) in the country, Cholamandalam is a large player in the vehicle financing space.
Home equity business
Its other major business is home equity. Home loans and other businesses are in an early stage and are being scaled up.
“The momentum in the growth of commercial and passenger vehicles and tractors has continued in Q1 of FY18-19 even as there are external risks clouding the overall economic scenario. However, the company is confident of maintaining its growth in the vehicle financing business,” N Srinivasan, Executive Vice-Chairman and Managing Director, CIFCL, said in the company’s latest annual report.
Positive factors
Prediction of a normal monsoon, good agricultural output, and implementation of minimum support price (MSP) are expected to boost farmers’ income.
Implementation of various infra projects, and continued growth of the road sector will further augment rural income and create demand for motor vehicles.
Its disbursements in vehicle finance grew 42 per cent at ₹20,540 crore in FY18, buoyed by the recovery signals in the commercial vehicles market. Also, profit in this area of business crossed the ₹1,000-crore mark for the first time in FY18.
The company’s home equity business is expected to return to normal growth this fiscal by spreading its wings to 60 more locations. “We will also resolve and bring down the non-performing assets of this business through a set of specific action plans,” said Srinivasan.
Post demonetisation, progressive familiarisation with GST regulations and favourable real estate prices in Tier-II and smaller towns, have led to a slow and gradual recovery in this segment in FY18, which is expected to improve in FY19. Srinivasan felt the government’s emphasis on housing for all would lend a big impetus to the growth of the affordable housing segment.
“We are targeting to grow significantly in this segment. The board has approved setting up of an independent housing finance company (HFC), considering the opportunity in the home loans segment, and the home loan business will be scaled up in the new HFC, which will be a wholly-owned subsidiary of this company,” he added.
The subsidiary company is in the process of applying to the National Housing Bank for starting the HFC.
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