Alternative Thinking, Accepting No Limits, Driving Positive Change
Mahindra Finance, the Mahindra Group’s financial services arm, could easily qualify as the first garage start-up of the Group, according to Ramesh Iyer, Vice Chairman and Managing Director, Mahindra Finance. Speaking at the Group Corporate Office #LEADERSPEAK Session, Ramesh Iyer shared the phenomenal growth story of Mahindra Finance. From his first day at work, where he had to go looking for the Mahindra Finance office (since not many knew about its existence), to physically “picking up” his own table and chair, he regaled the team with anecdotes on how these early challenges steeled his resolve to create a business that would speak for itself.
A Remarkable Journey
Almost three decades later, Mahindra Finance is one of the largest non-banking financial companies (NBFC), serving rural India. From a make-shift office, with four employees, to 33,000 employees across the country, with assets under management of almost 80,000 crores, Mahindra Finance has surpassed the expectations of the founding team, the promoters and shareholders. But what is more important, according to Iyer is that the Mahindra Finance growth story reflects the Rise philosophy in every aspect of the business. “We challenged conventional or the normal way of thinking, accepted no limits and chose the unchartered territory of rural India and have been instrumental in helping over 7 million rural customers, (most of them first time borrowers), Rise above their current means, by making them credit-worthy,” he explains.
The company’s success lies in its innovative yet simple and transparent business approach. An approach that also helped Mahindra Finance develop long-lasting and mutually beneficial business partnerships. Speaking about his un-scheduled meeting with Maruti MD, Jagdish Khattarin the late 90s, when Mahindra Finance was trying to make in-roads into financing other OEMs, Iyer narrated how his simple yet innovative proposition to Khattar of helping Maruti grow beyond its current market, without taking away any business from their current financiers won Mahindra Finance the opportunity to finance Maruti cars, a relationship that has grown stronger over the years, with Mahindra Finance being one of Maruti’s largest financiers today.
The company went public in 2006. Its market cap has grown from INR 2000 crores at the time of listing to INR 12,000 crores today and almost all the major investors have been with the company since then.
The subsidiaries too have had their share of success. Mahindra Insurance Brokers, set up in 2004 with an investment of INR 50 lakhs was valued at INR 1300 crores, when an investor came in a couple of years ago. Mahindra Rural Housing Finance has a loan book of INR 10,000 crore and Mahindra Asset Management Company, with an AUM of 4000 crores, recently attracted a new investor, Manulife, which acquired a 49% stake in the AMC, valuing it at INR 600 crores. The Company’s jvwith DLL in the US has a 1 billion USD loan book and with its recent foray in Sri Lanka with Ideal Finance, it is set to take its socially inclusive business model to other markets.
Opportunities in the current challenging scenario
The current scenario according to Ramesh Iyer, holds emerging opportunities for strong players, especially those focused on rural India. The buoyancy in rural markets, coupled with an above average monsoon, a good crop, and the unfolding of the rural infra story, augurs well for rural focused businesses. The current scenario has also afforded the team the time and opportunityto re-orient their thinking and strategy, to capitalise on the resurgence of the Rural economy. The Company is in the midst of a fund-raising round, to enable it to be adequately capitalised to optimize on the growth opportunities that lie ahead.
Tech as a Growth Enabler
Mahindra Finance was among the first financial services companies in the country to introduce handheld devices,to enable the Collection process. The company has since adopted various new age technology interventions to enable borrowing and repayment. The Company collects more than 3000 crores every month and about 80% of this is in cash, given the propensity of rural India towards cash transactions. Very few companies in India have the ability and competency to manage such transactions. Ramesh Iyer believes that future growth will come from analytics.The company is working with Rohit Pandharkar, Head – Data Science, Mahindra, and his team to mine the data and knowledge accumulated over the years, to analyse and forecast consumption patterns and launch new solutions. Iyer is excited about leading the technology changes happening in rural India, with these.
A Fulfilling Journey
The Company has successfully createda strong deeply penetrated rural financial inclusion model, deliveredlocally by a large network of locally recruited employees, who understand the customers and the nuances of the market.The Mahindra Financial Services Sector is present in every Indian State today. With its 2000 branch network, it covers upwards of 90% of the districts in the country and has servedclose to 7 million customers in more than 4 lakh villages, which is more than one in every two villages in the country. The Sector cumulatively manages assets upwards of 12 billion USD. “But more than the growth, what truly matters to us is the value we have created for our customers and the Positive Change we have made in their lives,”reiterates Ramesh Iyer.
Beyond commercial success, we have always laid emphasis on how we can give back to the community.Our employees feel a sense of pride at being associated with the sector and enthusiastically participate in several CSR initiatives that truly make a social impact at the grassroots. We are the only Indian NBFC to be listed on the Dow Jones Sustainability Index in the Emerging Markets category. We have consistently ranked amongst the Top 25 Great Places to Work and as the leading sector in the internal Mahindra Group MCARES survey.