Mahindra & Mahindra Financial Services Ltd, part of the $15.9-billion Mahindra Group, plans to raise around Rs 200 crore to enhance the capital base of its subsidiary, Mahindra Rural Housing Finance Ltd.
“And, we have decided to fund it on our own,” said Ramesh G. Iyer, Managing Director and CEO, Mahindra & Mahindra Financial Services. Mahindra Rural Housing was promoted as a wholly-owned subsidiary to primarily meet the housing loan requirements of people in rural areas. Later, National Housing Bank acquired a 12.5 per cent stake in the company. According to Iyer, the additional funding would also be in the same ratio.
Loan book
As there is a great demand in the rural market, “We would like to expand our presence and exposure,” said Iyer. “Our loan disbursement has almost been doubling every year, and our loan book currently stands at Rs 900 crore. Our target is to take it to Rs 4,000 crore by 2015,” he added.
To facilitate this, the company plans to expand its presence from seven to 14 States.
Overall, M&M Financial Services, which was started to fund purchase of only Mahindra vehicles, has today grown to fund buying of several other vehicle brands too.
The company is now a major player in the rural and semi-urban market where it funds, apart form Mahindra vehicles, Maruti cars, John Deere tractors, and other utility vehicles.
SME focus
Besides, it has started extending loans for second-hand vehicles too. “We are also looking to penetrate the small and medium enterprises sector in a big way. Currently, these portfolios are very small in our loan book. We expect the SME sector to account for at least 7-8 per cent of our loan book in the next couple of years,” he said.
The company is looking at financing up to Rs 5 crore towards capital investment and working capital needs of SMEs, particularly in the auto, agriculture and engineering sectors.