Orix Exits Retail Auto Finance Business

In a bid to contain its mounting losses, Orix Auto Finance (India), the 50:50 joint venture between IL&FS and Orix Corporation, Japan, has exited the retail auto finance business.

Further, IL&FS has transferred its business process outsourcing (BPO) division "Transerve" to Orix as part of a consolidation exercise, in order to improve its scale of operations.

Orix has recently completed a major organisational restructuring which included giving pink slips to almost 50 per cent of its staff, including some top executives. It had also slashed its fleet size by almost 50 per cent to 352 vehicles from around 600 vehicles earlier.

 

Hetal Gandhi, the newly appointed CEO of the company said, "We have exited retail auto finance, where we had a very small asset base, as the returns from the business were less than the cost of doing business. IL&FS's BPO unit, which has revenues of around Rs 15 crore and manpower of 160 employees, has been transferred to Orix as part of business consolidation to give the business some scale."

After slashing the company's fleet size, the company's vehicles are now operating at over 100 per cent utilisation, Gandhi said. He added that some time in the near future, the name of the company will be changed to Orix Auto Finance and Business Solutions, to reflect the company's presence in the BPO business, which handles work related to payroll outsourcing and security & portal services for corporates.

"We had made a number of investments much ahead of the right time, and had to exit. We now have a target to increase our asset book by around Rs 200 crore by the end of this fiscal," Gandhi said. Orix' Indian operations are currently miniscule in comparison with Orix' global scale.

Orix Corp. Japan, the world's largest fleet financing company, had last year reported net profits of around $380 million, Gandhi said.