Cholamandalam Investment & Finance Company Ltd (CIFCL) has embarked on a revamped business strategy with a digital push amid maintaining a strong liquidity position.
“The company leadership is committed to navigating this Covid-19 crisis successfully. Cholamandalam has been actively focussing on realigning its business strategy in the near term to mitigate the impact of Covid on the performance.
“We have readied the business execution strategy for identified areas such as disbursements,” said Arun Alagappan, Managing Director of the company, at the company’s Q4 investor conference call. “We have been in constant interaction with auto OEMs in assessing their strategy and are planning our action to sync with their moves,” he said.
The company is replanning disbursements geography-wise and is also in the process of identifying segments that may carry higher risk; mechanisms for collections are being strengthened.
Long-term growth
Alagappan said the company is judiciously using this time to invest in enhancing capabilities for long-term growth. Over the past weeks, multiple digital enhancements have been accelerated into implementation.
Some of the key initiatives include an end-to-end digital integration with auto OEMs, enhancing digital integration with channel partners, setting up alternate digital collection modes, evaluating options for remote investigation of field assets using video PD, instituting digital KYC process, among others.
“The company shall leverage these capabilities to enhance its competitive advantages in the coming quarters,” added Alagappan.
The company has adequate liquidity to offer moratorium to most of the customers without having availed moratorium from its lenders. About 76 per cent of its customers have availed moratorium due to the impact of Covid-19.
Liquidity position
Cholamandalam maintains a strong liquidity position. It has cash worth about ₹6,400 crore and sanctioned lines worth ₹4,500 crore at the end of FY20. Presently, it has about ₹1,000 crore worth of liquidity, including sanctioned lines. This will be adequate to pay all dues till September. The company raised ₹900 crore capital during this March quarter by issuing shares at a price of ₹320. It doesn’t plan to raise any capital in the near term.
On growth outlook, the company believes a quick revival in the rural market will support tractor demand.
Used-truck segment
Also, the used-truck segment may gain some traction due to increase in vehicle prices on account of the shift from BS4 to BS6 norms as some unutilised vehicles with large operators could come up for sale due to the sluggish macro environment.
The company operates 1,105 branches across India, and more than 90 per cent of branches have commenced operations post-lockdown