Aubrey Rebello, CEO. Tata Motorfinance

Can you briefly touch upon Tata Motorfinance’s business?
Tata Motors set up its vehicle finance business called Bureau of Hire Purchase and Credits (BHPC) in 1957 followed by Tata Finance. In 2002-03, the combined disbursals of BHPC and Tata Finance stood at Rs 1,600 crore. Tata Motorfinance, an amalgamation of the two, was formed in June 2003. In 2003-04, the disbursals increased to Rs 2,300 crore, rising to over Rs 3,400 crore in 2004-05. Last year, they totaled Rs 5,479 crore.
What is your USP?
We operate across the length and breadth of the country in both fairly safe and risky areas. For instance, we operate in Bihar, Srinagar and Jammu, as well as in the interiors like Agartala. We also have an edge in being a single window for customers. Our documentation and acceptance procedures are more customer-friendly. We also gain from the credit ratings and other benefits that Tata Motors is enjoying.
How widespread is your network?
We operate from 350-400 (Tata) dealer locations of passenger cars and commercial vehicles. Additionally, we have 70 branches of our own, which are slated to increase to 160 by year end. We plan to expand our network to 500 branches three years down the line. Much of the growth will come from B- and C-class towns and rural areas. We are bullish on India which is a vast country with over 500 districts. Even if we had only one branch in every district, we are talking of 500 branches. That in my view is not enough. In a country like ours, we should be operating from 500 branches and 400-500 dealer outlets. The closer you are to the customer you can promote your sales better and can better evaluate the customer.
How is financing passenger cars different from financing commercial vehicles?
A commercial vehicle is financed basically for commercial reasons. The key here is to estimate the customer's ability to pay his installments after he meets his operating costs in his business. You are his virtual partner in financing his business. In the case of financing passenger cars, you have to evaluate the customer's ability to pay based on his income. Between the two, financing CVs has a greater element of risk.
How do you secure yourself against the risks?
In normal business, if the risk is higher the down-payments are more. This means the customer's equity in the business is higher. Therefore, the main criterion is to manage the extent of funding. The second factor is the interest rate. If the risk is more, you may finance at a fairly higher interest rate because with the interest spread, you will try to make a higher profit. There will be some losses but the gains can be adjusted with the losses.
What is Tata Motorfinance’s future gameplan?
At present, we mainly finance our own vehicles including all our CVs and passenger cars. Our company also recently began financing Fiat vehicles because we also sell their products. In the next two to three years, substantial growth will come from financing our own vehicles. Tata Motors is planning massive growth. Though we have grown at 50 percent, it is our ambition to secure 40 percent of Tata Motors' sales from the current 24 percent. Beyond Tata Motors, we are financing excavators made by Telcon, a Tata Motors subsidiary. We also undertake refinancing (used vehicles) where we finance both our products (CVs and cars) as well as competitor products (passenger cars only).
Reports indicate that Tata Motorfinance plans to set up operations abroad. Which markets are you looking at?
We are planning to be in all the export markets that Tata Motors is active in. The criteria is that our sales volumes must be large enough to support our operations. We already have large volumes in Korea and Sri Lanka. We plan to pilot the project within six to eight months.
Will you be adding new products to broaden your portfolio?
As and when the rules and regulations improve and taxation issues are cleared, we may go into other products like operating leases, annual maintenance contracts and fleet management. These are products abroad that we will bring into the market. We will participate in any financing we can do over the lifecycle of a vehicle.