Mahindra & Mahindra Financial Services (MMFSL) anticipates that the balance sheet of its rural housing finance subsidiary will grow to around Rs 5,000-6,000 crore in about three to five years' time, a top company official said.
"Our rural housing business stood at Rs 90 crore last year. This year, in the first-half itself (H1, FY11), we have done that much business," managing director of the Mahindra Group firm, Ramesh Iyer, told PTI here.
Mahindra Rural Housing Finance holds a 87.5 per cent stake in the subsidiary and the remaining 12.5 per cent is held by National Housing Bank (NHB).
Mahindra Rural Housing Finance's profit stood at Rs 3.6 crore in H1 this fiscal as against Rs 40 lakh in the year-ago period. The company intends to drive growth of this business aggressively and "we are eyeing a balance sheet of Rs 5,000-6,000-crore from this business in the next three-five-years," Iyer said.
Mahindra Rural Housing Finance extends small-ticket loans in the range of Rs 1.5 lakh to Rs 4 lakh for room additions, home improvement, etc.
"The priority requirement of people is shelter and credit availability in this segment is still not adequate. We see an immense opportunity here," Iyer said.
More From This Section
Mahindra Finance also wants to chart out an aggressive growth trajectory for another subsidiary, Mahindra Insurance Broking. Mahindra Insurance Broking's profit in H1, FY11, stood at Rs 9.5 crore as against Rs 5 crore in the year-ago period.
Mahindra Finance, which clocked an income of Rs 469.58 crore in Q2, FY11, as against Rs 352.98 crore in the year-ago period, is upbeat about the remaining two quarters and feels that it will garner about 60 per cent of the year's revenue during the six-month period.
"H2 will be buoyant. It will be better in terms of cash flow and even in the past, H2 has contributed 60 per cent of the whole year's revenue. We expect to do very well in the festival and harvest seasons and already October has witnessed a huge growth," Iyer said.
The company's net profit in Q2 stood at Rs 116.2 crore, as against Rs 69.2 crore in the year-ago period. Disbursements grew 60 per cent in H1, Iyer said.
"We have managed to maintain our average cost of borrowing at 8.3 per cent and besides, contained our interest costs," he said.
Gross NPAs have been brought down from 9 per cent to 5.8 per cent and net NPAs from 3 per cent to 1 per cent, he added.
Going forward, while the company aims to maintain its numero uno position in lending for Mahindra Group vehicles, it will also focus on commercial vehicles, construction equipment and second-hand vehicles.
"The company is on a solid footing and firmly set on the growth path," Iyer said.