Sonalika group to foray into auto finance sector

As part of diversification plans, the Rs 2,500-crore tractor and farm equipment major Sonalika Group has ventured into the auto finance sector.

The new company, named International Autotrac Finance Ltd (IAFL), is a 100 per cent subsidiary of the group and would finance the vehicles produced by International Tractors Ltd (Sonalika brand tractor) & International Cars & Motors Ltd.

The newly launched financial arm of the company is hopeful of doing business worth Rs 300 crore by the end of the fiscal year 2007-2008.

In an interaction with Business Standard, IAFL Head (Retail Loans) Ravi P Sharma said, "The new company would facilitate the potential customers of Sonalika by disbursing hassle-free loans within one day."

When asked whether the company would extend the loans for other consumer products also, he said, "Currently, we do not have any such plan and the loans would be restricted to vehicles produced by International tractors Ltd and International Cars & Motors Ltd."

"The IAFL would be a very customer-friendly company, which would give them auto loan on less rate of interest and with least formalities," he added.

He told that four different departments have been created by the company to help the customers avail the loan easily. The company will also provide the information and handle the inquiries online.

"The new company would achieve its goal in three stages. At the first stage, the finance facility by IAFL will be available only in Punjab and in second stage we would extend it to northern India and finally we will cover the complete Indian market," he added.

So, in order to strengthen their presence, the finance company would open 24 new branches spread across Northern region by the end of this fiscal year.

The proposed locations for the branches are Ambala, Karnal, Jaipur, Jodhpur, Chandigarh, etc. At present, it has a branch each in Amritsar, Ludhiana and Hoshiarpur in Punjab.

Moreover, to have a nationwide presence, the company plans to open 24 new branches in southern part of India. Commenting upon the business target, he added, "By the end of 2009, we are hoping to do business worth Rs 1,000 crore through the finance company."

Recently, the group also announced investments of Rs 1,150 crore in its two subsidiaries "" International Cars and Motors (ICML) and International Tractors Ltd(ITL).

Of the total, it would invest about Rs 700 crore on capacity expansion, enhancing its design facility and development of a new sports utility vehicle(currently it produce a multi-utility vehicle having brand name Rhino).

Also, it is contemplating to set up a new tractor manufacturing unit in southern India and increasing the capacity of existing tractor unit at Hoshiarpur with an investment of Rs 450 crore.

The current facility in Hoshiarpur, Punjab, has production capacity 40,000 units(tractor) a year.

Besides, the company is also in the process of increasing the capacity of the utility vehicle manufacturing unit in Una, Himachal Pradesh, from the current 24,000 units to 60,000 units a year.