Mahindra Finance may launch mutual fund biz by April

Mahindra Finance, a non-banking financial company (NBFC), which recently received licence from Sebi for mutual fund business, is likely to kick-start its mutual fund arm by April, a top company official said.

Moreover, the company is pinning hopes on a good monsoon to improve its performance in the next financial year.

"We have recently received licence for mutual fund (MF) arm and we are currently busy filing for some of our MF products for Sebi's approval before we kick off the MF arm," Mahindra Finance Managing Director Ramesh G Iyer said.

"The team is in place. We are hopeful to make our MF arm operational by April," he said.

The company is also into rural housing and insurance distribution businesses.

"Our balance-sheet is currently having an assets under management of nearly Rs 40,000 crore. Mahindra Finance is present in sectors like rural housing with nearly Rs 3,000 crore assets and insurance broking," he said.

Talking about rural business of Mahindra Finance, he said, "Rural business is going through tough times in different parts of the country due to a weak monsoon last year and hence, rural cashflows are under pressure and the growth is a little stretched."

"Third quarter (of 2015) was a tough one. Still, January crop has been good and we do hope to have positivity by the end of the year," he said.

Apart from a good monsoon, the company is also betting on the proposed road projects to improve results in the current calendar year.

"We are quite hopeful that the proposed road projects will come on ground soon, and the current calendar year may see good monsoon. Thus, we do hope to see better results next year," he added.

The company is hopeful of improving its net NPAs riding on the good monsoon this year.

"Our net NPA as of December 2015 is at 4.6 per cent, against 3.4 per cent of net NPA in the year-ago period, which is the outcome of a stretched cash flow from the rural market. However, we are hopeful that our NPA will improve due to the expected better monsoon this year," Iyer said.

However, he explained that "in Mahindra Finance's case, net NPA doesn't mean credit write-off. Our strategy for branches is towards going closer to customers," he remarked.

"A lot of our NPA customers are able to service the loans by paying one EMI. However, they are unable to pay the past overdues," he said.

The company has 1,179 branches as of December, and it has added nearly 300 branches in the last two years, he said.

Mahindra Finance registered 19 per cent growth in loan disbursement in Q3-FY16.

"We had 18-19 per cent growth in loan disbursement in Q3 due to good festival demand," he said, adding "We have nearly 20,000 people and we have added another 2,000 people in the last one year."

As on December, we had loan disbursement close to Rs 20,000 crore, which was largely in segments like tractor and auto finance, largely into semi-urban and rural areas, he said.

The company doesn't have any capital raising plan as of now.

"We are comfortable on the capital front. Our CAR is currently at 17-18 per cent. We don't have any capital raising plan as of now. We may think of capital raising when our CAR comes down to 15 per cent," he said.