Cholamandalam bets big on e-three-wheelers; eyes tie-ups with manufacturers

The aggressive foray comes at a time when India's electric three-wheelers are expected to contribute 30% of new vehicle sales in the country by 2025, according to Icra

Cholamandalam Investment and Finance Company (CIFC), Murugappa group’s vehicle financier, is planning to aggressively enter the electric three-wheeler and commercial vehicle segment and is already in talks with manufacturers for tie-ups.

“We are starting in a small way and will keep moving up in electric vehicles. Our focus is on the three-wheeler segment of the electric-vehicles. We are more focussed on vehicle financing for commercial vehicles. So, we will look into electric commercial vehicles that are first coming to the market,” said Arulselvan D, executive vice president and chief financial officer of CIFC. Arulselvan said the company is already in talks with three-wheeler manufacturers for tie-ups.

The company’s aggressive foray comes at a time when India’s electric three-wheelers are expected to contribute around 30 per cent of new vehicle sales in the country by 2025, according to ratings agency Icra. Moreover, despite Covid, EVs posted a growth of 40 per cent in India during 2020.

When asked about the possible boom on electric two-wheeler segment with the aggressive foray of Ola, Arulselvan said, “Two-wheelers are more a consumptive growth than productive growth. We will look into vehicles that are on the productive side of it, vehicles which are more used from a business perspective.”

The major business segments of the company include vehicle financing, property loans or housing loans and SME loans. When asked about further diversification plans, he said, “We are looking at leveraging relationships with fintech. At this juncture, it is early stage”.

CIFC’s net profit for the first quarter of the financial year dipped by 24 per cent to Rs 327 crore, as against Rs 431 crore during the same period last fiscal. On the other hand, aggregate disbursements saw a marginal growth of 1 per cent during the quarter under review. Collections also suffered, resulting in increase in Stage 3 assets from 3.96 per cent to 6.79 per cent.

“Majority of the sectors opened up. Except in some states like Kerala and some in the North East, the majority of the country is back to a normal level. In July we are seeing good traction in disbursements also. I believe things will be better this fiscal, though a lot will depend on the effect of the third wave,” he said. Last year, the company reported a better disbursement during the first quarter despite the lockdown, because of better demand on tractors.

The company said that it is seeing a lot of good demand from the SME segment, despite the Covid situation. “Compared to last year, there is not much stress from the SME sector. This is mainly because factories are still running.” The company said that the restructuring option with asset classification benefit extended by RBI under “Restructuring 2.0” was used to the extent of 3.86 per cent of the book as of June 2021 and its total restructuring stood at 5.44 per cent of the book.