We are adopting a partner-led strategy in our business: Ramesh Iyer, Mahindra Finance

Ramesh Iyer, Vice Chairman and Managing Director of Mahindra & Mahindra Financial Services Limited (MMFSL), talks about the new strategy for the post-pandemic world, demand from rural areas and asset quality among others during an exclusive interview with Swati Khandelwal, Zee Business. Edited Excerpts:

Q: Mahindra Finance has recalibrated a new strategy for the post-pandemic world. Let us know about the strategy and how Mahindra Finance will protect its shareholders from this pandemic situation? 

A: We work a lot in the semi-urban rural market, which is a big physical market and needs opening of branches, reaches to the customers or customer comes to us at the branches either to take a loan or for repayment. So, the first change is that we want to provide as much digital solution to them as much as we can and we will do so. Our penetration will be digitally and we already were trying to do so from quite some time, not because of this pandemic, but now it is being used a lot. So, we are now seeing that at least 15-20% of our collection is coming through digital means.

Enquiries are being generated through digital means. So, this is going to be our definite approach. Secondly, we are seeing that the customers in today’s situation want a solution from us – I do not say that it is permanent – because everyone has their problem, like someone’s revenue has decreased, the business has gone down, few need more time for repayment, while some say that it will take some more time to start their work. So, I think that there is a need to change the total employee mindset for employee engagement with the customers and we have worked a lot on it in the last four-five months. We are trying to find ways to provide a solution to the customers and adopt a partnership approach rather than a financer and a customer individual approach that has been practised for a long time. 

Q: You have said that you have more focus on rural area and tractor sales have been encouraging this time and farm equipment has got a good response as compared to other segments. What is your demand outlook on it and what contribution will it have in overall business? Also, tell us about the book that is under moratorium at present?

A: The demand for tractors was very good, in fact, I understand that the inventory levels with the dealers have reduced hugely and there was a supply-side problem otherwise the numbers would have been more. The prices of few crops were announced in the recent past and the monsoon has been good and it is expected that the next crop is going to be a good one. At the same time, the government also has a focus on rural due to which infrastructure is opening up. If you have a collective look on these aspects then we will get a chance to see rural buoyancy and I feel that it is going to be good for the next 2-3 years. And tractor demand will continue to be a god one with this.  If we talk about the overall rural market than if monsoon remains good, crop cash flow is good, there is an improvement in infra cash flows than all products will be benefitted from it. I would like to give a reference based on 2010-14 when the rural cash flow was going well, the rural growth was good and now, we are seeing a similar kind of situation will be created between 2021 and 2024 and it will benefit us. As far as the moratorium is concerned then it was provided to 75% of the customers at the start out of which 40-60% of them are repaying instalments regularly. Now, when the regulator is talking about restructuring then we will approach the customers who have not been able to make payment to understand their requirement and involve them in restructuring. 

Q: How Mahindra Finance is ensuring adequate liquidity and asset quality remains strong and do you have any concern from that segment or you think that you have managed it properly and it will not have any impact on the books of the company?

A: As far as we are concerned then we as a company have made liquidity tie-up with various sources. Our fixed deposit programme is going well this is why we didn’t take a moratorium from the banks and timely repaid all the liabilities. We have made many arrangements for cash flow for further requirements. Besides, as you know that we went with the rights issue due to which our capital position is very strong. So, as far as overall liability position including capital is concerned then we are comfortable with it to embark on the growth story.

When it comes to asset quality then definitely amid the market conditions there will be some segments where we feel that they will need some more time, like fleet operator segment in the commercial vehicle, taxi aggregators, the vehicles that are functional in tourist segments and school bus operations, as they will take some more time to get out from the situation

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And we assume that if this segment is supported well through the restructuring programme either by reducing their instalments or increasing the repayment period then I think that the asset quality will be addressed well and it will not create some big problems.