Walchand Hindustan Ltd (WHL), the former holding company of the Rs 1,600-crore Walchand group, is striking out on its own by entering the automobile financing business for starters. WHL will eventually have a tie up with a foreign financial intermediary.
WHL, which was earlier called Premier Construction Company (PCC), had holdings in six firms -- Premier Automobiles, Hindustan Construction Company (HCC), Ravalgaon Sugar Farm, Indian Hume Pipe Company, Walchandnagar Industries Ltd and Acrow India Ltd.
After the division of the group, HCC continues to be a subsidiary of WHL, but is managed by Ajit Gulabchand. WHL has Ajit Gulabchand's cousin, Bahubali Gulabchand, as its executive chairman, while Bahubali's daughter, Pallavi Jha, is chief executive officer.
Pallavi Jha's husband, Sanjay Jha, has quit his job vice president (marketing) in ITC Threadneedle Asset management company to assist her in the auto finance venture. WHL, which was essentially into short-term corporate financing deals such as inter-corporate deposits, bills discounting and into investments in the stock market after the division of the group, is now moving into the medium- and long-term business of automobile financing.
There is an interesting twist in the tale of WHL entering automobile financing.
PCC was the promoter to Premier Automobiles, the first company to manufacture cars in India. Now WHL is entering automobile financing. Says Pallavi Jha, "Apart from vehicle financing, WHL will enter into fixed deposit mobilisation and also develop a retail distribution network."
The company is taking a strategic focus in the states of Maharashtra and Gujarat where the brand equity of Walchand is very strong. WHL also plans distribution of insurance products and mutual fund scheme after the car finance business stabilises.
Over the next 18 months, the company will open 18 branches in Maharashtra. WHL with a net worth of around Rs 25 crore can leverage up Rs 75 crore as it is a loan and investment company.
However, by changing the asset profile to hire purchase and leasing assets, WHL plans to turn into to hire purchase and leasing company. This will enable the company to turn to a capital adequacy based entity and raise liabilities without any ceiling.
WHL plans to utilise four channels to sell its car finance scheme. These are credit deliver directly by the company's sales force, through direct marketing of distribution specialists, brokers and other intermediaries including capital sales agents.
The company plans to raise debt funds through fixed deposits, bank borrowings and debentures. On the asset side, Pallavi Jha points out that the company will purely retail. The company plans to finance about 1000 cars initially creating an asset base of Rs 50 crore in the first year. The fixed deposit and car finance schemes will be launched in April 1997.
Sources point out that the success of WHL in the car finance market is incumbent of rapid getting volumes in an increasing competitive market.
