Cholamandalam Invest To Begin Tractor Finance

Cholamandalam Investment & Finance Company Ltd (CIFCL), the financial services arm of the Rs 3,900 crore Murugappa group, has decided to expand its services to the agricultural sector by getting into tractor finance.

Cholamandalam is also expected to roll out pension funds through its asset management subsidiary, according to a senior company official.

M Anandan, managing director, said, "We would like to de-risk our portfolio by diversifying our retail services. We are aiming to finance tractors used for both agricultural and commercial purposes."

The move is likely to fructify by the end of this fiscal and CIFCL has commissioned a market study to estimate the market potential across the country, he said. The strategy comes after another year of above-average rainfall in the country which is expected to boost demand from the agricultural sector.

At present, passenger cars constitute 40 per cent of disbursements, light commercial vehicles (LCV) 25 per cent, heavy commercial vehicle (HCV) 25 per cent and the rest two-wheeler finance.

On the network expansion, CIFCL has planned to extend the geographical reach by opening five branches in north India, where it has no presence, this fiscal. In the south and west, where the company has 30 branches, CIFCL is likely to open 65 extension counters.

"We would like to build simultaneously our capabilities in distribution, manpower and asset base. In the stagnant market, we expect the growth to come from capturing competitors' market share and by extending our geographical reach," he added.

Anandan said that the company was looking at a growth rate of 70 per cent in asset base this fiscal from Rs 874 crore as on March 2001, adding that personal loans and two-wheeler finance was likely to grow at a faster rate.

On the question of a joint venture partner for the Cholamandalam Asset Management Company, he said despite the pulling out of Cazenove from the venture, the company was able to attract an incremental net inflow of Rs 300 crore in the past seven months. "We are still open to any joint venture partner who could bring in additional expertise," he said.