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Cholamandalam Investment & Finance Company Ltd, the NBFC arm of $4.4 billion Murugappa Group, said that it is planning to apply for a licence with National Housing Bank (NHB) to scale up its housing finance. The company has said this will help the company to raise funds at a competitive price. Besides, the company also said it started lending to SME business and would look at raising capital by 2014-15.
Vellayan Subbiah, Managing Director, Cholamandalam Investment & Finance Company Ltd, said the company has started a pilot (home loan) in South India, as the book increase we will apply for licence to NHB. The licence will allow the company to borrow low cost of fund.
“At present we are understanding and getting the business run and we will continue for the next year, following which the company will apply for licence,” said Subbiah, while addressing the analysts.
He said the company will target self employeed, with a ticket size of around Rs 30 lakh. The money will be disbursed against property. “This segment (self employed) we know well, though it is early days for us, we see lots of opportunity.”
The target customers include restaurant owners, people who are in the service business and others. The company has said it wanted to be sure of the segment, credit quality, growth and economic benefit, before it scale up the business.
The company also said it started lending to the SME business, both for working capital and term loans (against plant, equipment, land and asset classes) requirements. At present the book size is around Rs 13 crore, while the yield is little above 14 per cent.
The company is catering to the Murugappa Group’s eco system and the disbursement has been done in a limited way as a pilot.
Commenting about company’s fund raising plan, Subbiah said, in February the company raised around Rs 300 crore through equity issue around 21 investors, including FIIs, MFIs, PEs and insurance companies, have participated. Company’s tier I capital is around 11 per cent and we may need to raise money in 2014-15,” said Subbiah.
Meanwhile, the company will continue to borrow around Rs 1,000 crore every month for its disbursements. A consortium of 20 banks with approved limits of Rs 2,480 crore, according to company’s investors presentation.
For vehicle finance and home equity, which are the two major businesses for the company. Vehicle finance disbursement has grown for us by 32 per cent quarter versus quarter, while home equity has grown by 42 per cent. Both are the core businesses have really contributed to most of its profit growth and disbursement growth.
The company has posted an increase of 43.84 per cent in net profit for the quarter ended March 31, 2013, on a consolidated basis, at Rs 87.41 crore. The net profit of the company during the same period of previous fiscal was Rs 60.77 crore.
The company disbursed Rs 3,140 crore in Vehicle Finance during the quarter as against Rs 2,370 crore in the same period of 2011 - 12 and disbursed Rs 639 crore in Home Equity loans as against Rs 448 crore in the fourth quarter of previous fiscal year.
