As part of its derisking strategy, Cholamandalam Investment and Finance Company (CIFC) is planning to enter new areas including affordable housing, rural financing and medium small and micro enterprises (MSMEs). The lender also said it was awaiting Reserve Bank of India’s guidelines for banking foray.
Speaking on the sidelines of the annual general meeting here recently, Vellayan Subbiah, managing director, said, “ a good family-run business always thinks over the 10- year horizon. In line with this, the company has decided to enter new areas. In a way, this is to bring down the dependence on one particular sector — automobile — which accounts for around 72 per cent of the total portfolio.”
The company would start lending for affordable housing, MSMEs and enter rural financing before the end of the current financial year.
For MSMEs, the company has started a pilot along with its group companies EID Parry and Coromandel International. The ticket size will be 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 1 million farmers,” said Subbiah.
Similarly, the company is planning to focus on vendors, who are catering to another group company Tube Investments of India. A company official said the vendors offtake was Rs 250-300 crore ever year.
On the affordable housing segment, the company said it would look at self-employed people.
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MBN Rao, chairman of CIFC, said the home equity business had an asset portfolio of Rs 3,083 crore, constituting 23 per cent of the net managed assets. It recorded a disbursement of Rs 1,528 crore as against Rs 1,235 crore, an increase of 24 per cent.
The asset financing arm of $4.4 billion Murugappa group had entered the tractor business last fiscal and disbursed around Rs 300 crore, said Subbiah.
However, the gold loan business, which was started again in the last fiscal, was hit due to the central bank’s guidelines. “We are waiting for the new guidelines to grow this business,” he said.
In 2011-12, total disbursement rose 55 per cent to Rs 8,889 crore.
Vellayan said the company expected to grow around 30 per cent in disbursements this year. To support the growth, it would 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,” said Subbiah.