Ramesh Iyer, Vice-Chairman & Managing Director, Mahindra Finance, spoke about India’s growth story, the expectation from the budget, growth prospects of Mahindra Finance and his stance on merger and acquisition during an interview with Swati Khandelwal, Zee Business. The interview was conducted on the sidelines of the World Economic Forum in Davos. Edited excerpts: 

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Q: Davos 2019 is all about Globalisation 4.0 amid global volatility like the trade war between the US and China, Brexit in the UK, currency and crude prices. How optimistic you are about India’s growth story in such a scenario? How bright are our prospects?
A: India’s story is very strong. In fact, India has a definite mention in almost every session that was attended by me due to its young population, technology penetration and consumption story. I feel that India’s story is very strong and it is good news for CEO’s like us. 

Q: Yes, India’s story is very strong but there are certain difficulties like NBFC and Banks. What is your outlook on India’s performance in the financial year 2018-19 and 2019-20?
A: Things will depend on the ways, like long term strategies, that is adopted by strong players of the industry to handle the situation and their importance in handling the issue. 

If we have a look on our balance sheet, at least when we have seen the liquidity position, then we have managed a strong asset liability management team and have never seen a negative till date. So, we are running a positive mismatch. That’s why I consider it as an opportunity as we can synergise, where every partner, like OMC, dealer or we ourselves, joins the table and works together and contribute some share into it and rest is passed on to the consumers. 

Q:  What is your view on the budget? 
A: NBFCs have demonstrated their importance and performed in difficult situations. And, a company like ours who has played an important role in financial inclusion and have consumers in 3.60 lakh villages expects that NBFCs should be recognised as an industry. NBFCs will also look forward towards the availability of liquidity and creation for a refinancing body for them.  

Secondly, farmers are taken into consideration when any decision on loan waivers are taken. Such steps don’t spoil the fundamentals of credit as they are transactional in nature and we will have to live with it. Such waivers have been announced in the past too, and that’s why I don’t think that it will have a major impact. 

Q: This is an election year. Talk about the growth prospects of Mahindra Finance in the year and changes that elections will bring with itself?
A: Have a look at Mahindra Finance’s growth story and you will find that we have grown by around 20 per cent in the first six months of the year. We have always said that we will grow by 15-18 per cent. And, this growth will be backed by our presence across the country and product segments. Interestingly, we can’t see a huge competition in rural India and I will always depend on the position of competition that we are facing in the market and the products in which we are functional. 

Q: Had NBFCs, exclusively Mahindra Finance, grasped the opportunity created due to the challenges like NPAs that is high and provisioning, being faced by the banks. 
A: If we look at the growth story of our tractor and auto business or SME than will find that our market share has gone up in all the segments. We have a market share of 30 per cent for Mahindra products and 10 per cent in Maruti. If you have a look at the market share than you will find an improvement of at least 1-2 per cent and this growth was backed by the opportunities, which were capitalised. During capitalising the opportunities, we try our best to increase our branches and we have around 1800 branches in the last six months and we have gone deeper. 

Q: Do you think that it is a right time for RBI to go for a rate cut?
A: I feel that a rate cut will be announced, and it should be slashed as there is a slowdown in auto industry growth, despite discounts are being announced by the OEMs. Thus, if there is a decline in the operating or acquisition cost – as operating costs have gone down with a decline in fuel prices – will increase the demand. 

Q: Do you think that an NBFCs like yours will try to explore themselves in the corporate lending segment amid liquidity concerns that still exist in the market?
A: The first thing is that NBFC must not create a short-term strategy as today’s opportunity may not exist after six months or a year as we will not be able to pull out from the segment with ease. In fact, we have a clear roadmap that we must work in the retail segment and we have our presence in the semi-urban-rural market and we want to maintain our strength in the area. And, we have a good relationship with every OEM and are serving about 6 million customers at present. We want to serve them in the best possible way. 

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Q: What is your stance towards merger and acquisition? 
A: Our stance is the same as before and we will look ahead for such opportunities where our cultural feed stands right and products where we want to go but have not entered it, like gold loan and we haven’t tried our hands in the segment as we feel that it is a specific product and a different skill sets will be needed for it and in the SME segment. We are open for such opportunities and are ready to invest in them.