Mumbai: To meet the high level of demand coming in mostly from rural India, Mahindra & Mahindra Financial Services (Mahindra Finance) plans to raise up to Rs 570 crore through institutional placement of equities by mid-January, a top company official said Monday.
The non-banking finance company (NBFC) and the financial services arm of country’s largest utility vehicle-maker, Mahindra and Mahindra, has already received its Board approval for the same.
“We will start the fund-raising exercise by mid-January. We plan to raise up to Rs 570 crore through a QIP to fuel our expansion plan over the next two-years and increase our authorised capital to Rs 190 crore from the present Rs 160 crore,” Mahindra Finance’s chief financial officer V Ravi told PTI.
The capital is to be raised to augment the company’s long-term resources by enhancing its capital base, besides leveraging business opportunities, providing funding for loans to its customers and for general corporate purposes, he added.
“We have already achieved a healthy growth of over 60% in the first half of this fiscal at Rs 12,500-crore (Assets Under Management) and to sustain this growth level, we need to expand our base, mainly in rural India. Rural India is growing at 30-35% and there is a lot of cash. Tractors, two-wheelers and small cars sales are doing extremely well,” Ravi said.
The company’s AUM has been growing at 25% YoY for the last five-years.
While tractors contributed to 20% of the company’s revenues, 80% came in from automobiles of which 40% emanated from small cars, Ravi said, adding that among the cars, financing of Maruti cars fetched the maximum revenue.
He said that with its parent company’s (M&M) foray into the two-wheeler segment, Mahindra Finance expects a significant jump in its revenues.
On its retail expansion, Ravi said the company would open 75 branches this fiscal, mostly in Tier II and III cities. Presently, it has around 506 sales offices in the country.
Asked about its gold financing plans, Ravi said that it is presently running a pilot programme in Kerala and plans to launch it by end-this fiscal.
The company has in the three months of the pilot done a business of about Rs 20-crore. “We plan to launch gold finance by March-end after evaluating the response. We will initially launch it in south India,” he added.
The company also plans to add a million new customers every three-years. Presently, it has a customer base of around 1-million.