Cholamandalam Investment & Finance Company Ltd, a leading player in vehicle finance, has forayed into the financing of electric vehicles even as the Murugappa Group NBFC is in the process of identifying long-term growth areas (15-20 years).
Chola has now entered the sphere of financing electric vehicles to make them more prevalent in the economy, and plans to establish its presence in this domain, the company said in its latest annual report.
Electric three-wheelers
Its group company, Tube Investments, is also gearing up to enter the electric vehicle segment, and is expected to introduce its first set of electric three-wheelers this fiscal. While Cholamandalam is expanding its vehicle portfolio, it is also working on long-term growth plans
“We have currently embarked on a journey in finding out what we would want Chola to look like in 15-20 years. This calls for building on our current business model and scaling up. It requires us to add sets of skills in analytics, technology, and digital areas,” said Vellayan Subbiah, Chairman, in the report.
The idea is also to move more to an ecosystem model and to understand how Chola can present itself in such a model.
The natural logical ecosystem for Chola will be the vehicle ecosystem.
However, this alone may not be adequate for the next 15 to 20-year time frame. “Therefore, we have embarked on a process of identifying other ecosystems and evaluating how to compete effectively in each of these ecosystems,” he added.
The company’s three key business segments include vehicle finance, loans against property/ home loans, and SME loans. Vehicle finance contributed about 72 per cent of the company's loan book as of March 31.
Vehicle business’ AUM
The AUM of the company stood at ₹69,996 crore as of March 31and vehicle business’ AUM was ₹50,415 crore during the period. In the vehicle portfolio, used vehicles and LCV segments accounted for 27 per cent and 20 per cent, respectively, while heavy commercial vehicles, cars and tractors accounted for 10 per cent each.
Subbiah said that while the long-term outlook continued to remain bullish, FY22 presented an uncertain outlook due to the impact of the second wave of Covid-19.
Apart from agriculture and related activities, most other sectors of the economy have been adversely impacted by the pandemic, and are expected to show de-growth.
“Cholamandalam will strive to consolidate its position as a leading player in the NBFC space. We are cautiously optimistic that a robust collection mechanism aided with a strong credit risk assessment framework and investment in digital platforms will support the company to steer through the strong currents of the pandemic in FY22, too,” he added.