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Mahindra Finance plans to take its first step into corporate lending this year with small and medium enterprise (SME) financing.
For the BSE-listed firm, this will add to an expansive portfolio — from auto lending and second-hand vehicle loans, to housing loans and insurance broking.
“It's in synergy with our core business. We have a large Mahindra supplier and dealer network, so we will start by participating in their expansion plans,” Mr Ramesh Iyer, Managing Director, Mahindra & Mahindra Financial Services, told Business Line .
Rural focus
Though the financer's focus will remain on rural and semi-urban India, the new product will be offered in around 60 of its 600-plus branches in the bigger cities. In the first year, the company is eyeing up to Rs 1,000 crore of SME financing, with a target of Rs 4,000 crore in three years.
“After that, we will look to finance other firms as well.We won't say no to other opportunities, but we will encourage them if they come with some reference of a Mahindra associate. About 45 per cent of our sales is from Mahindra tractor and auto products,” he added.
The company is adding 50-60 branches this year, and is looking to increase the share of both commercial vehicle and second-hand vehicle financing to 15 per cent of sales each (from 10 per cent).
In 2011-12, the company's total income touched Rs 2,768 crore on a standalone basis.
While the company already has $220 million worth of business in the US (finances Mahindra's tractor sales), it is now considering setting up offices in China, South Korea and South Africa by next year.
Overseas Expansion
It will support Mahindra's automotive/tractor sales in these markets. In South Korea, Mahindra already has a strong presence — it recently acquired South Korean utility vehicle firm Ssangyong — and South Africa is also important market. “This year, we will set up a project each in these markets by sending a team for feasibility studies. A pilot will start by next year,” Mr Iyer said.
On Monday, the non-banking lender had posted a 45 per cent rise (Rs 228 crore) in its standalone profits for the fourth quarter of 2011-12.
roudra.b@thehindu.co.in
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