As part of derisking strategy Cholamandalam Investment and Finance Company (CIFC), the asset financing arm of $4.4 billion Murugappa Group, is planning to foray into new areas including affordable housing, rural financing and MSME. The lender also said that it is awaiting RBI's guidelines for entry into banking and will raise debt to the tune of around Rs 3,000 crore every quarter.
Speaking at the sidelines of company's Annual General Meeting on Monday, Vellayan Subbiah, managing director, CIFC said “ a good family-run business is always about thinking over the 10 years horizon. In line with this thought, the company has decided to enter new areas. In a way, this is to bring down the dependence on one particular sector – automobile sector – which accounts to around 72% of the total portfolio”.
He added that lending towards affordable housing, for MSMEs and rural financing will start before end of the current fiscal.
For MSMEs the company has started a pilot, along with its group companies EID Parry and Coromandel International, and the ticket size will be around Rs 50,000 to Rs 1 lakh. “Our immediate focus will be people within our own eco-system. For instance through Coromandel we can reach out to around one million farmers,” said Subbiah.
Similarly, the company is planning to focus on vendors, who are catering to another group company Tube Investments of India (TII). A company official said these vendors offtake is around Rs 250-300 crore ever year.
On the affordable housing segment, the company has said it will look at self employed people.
Earlier M B N Rao, chairman, CIFC said that on the home equity business currently has an asset portfolio of Rs 3,083 crore, constituting 23% of net managed assets. It recorded a disbursement of Rs 1,528 crore as against Rs 1,235 crore, an increase of 24%.
Meanwhile the company which forayed into tractor business last fiscal has disbursed around Rs 300 crore, said Subbiah.
He added, the gold loan business, which was started again in the last fiscal was hit due to RBI's guidelines. "We are waiting for the new guidelines to grow this business," he said.
Meanwhile the company has said that it has closed its business finance with an asset float of Rs 491 crore, which constituted closed to 4% of the net managed assets of the company.
According to Rao the division was closed in FY12 and the loans are collateralised and the company has stringent evaluation and online control mechanism for monitoring the stock prices.
The book is secured 68% by way of equity shares and 32% by way of combination of property/assets and shares. The business continues its focus on the promoter financing books as the key business segment.
In FY12 total disbursement rose by 55% to Rs 8,889 crore and balance sheet stood at Rs 13,423 crore
Vellayan said, the company is expected to grow around 30% in disbursements this year and to support which it will raise around Rs 3,000 crore debt every quarter. “For this fiscal we are comfortable with our equity base, next fiscal we may look at raising equity quantum and mode nothing decided,” said Subbiah.