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Sunday, January 29, 2023

Rebranded ‘Mahindra Ideal Finance’ adds IPO to its bucket list – The Morning

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  • In conversation with Mahindra Finance Vice Chairman/Managing Director Ramesh Iyer 


Following the recent rebranding of Mahindra and Mahindra Financial Services Ltd. (Mahindra Finance/MMFSL) in partnership with Ideal Finance Ltd. to rebrand the latter as Mahindra Ideal Finance Ltd. (MIFL), The Morning Business sat down for an interview with Mahindra Finance Vice Chairman/Managing Director Ramesh Iyer.

Mahindra Finance is a financial service provider based in India and a subsidiary of the Mahindra Group. Mahindra Finance deals with a customer base in several sectors such as personal loans and the small and medium enterprises (SME) sector.

Speaking about the growth direction of Mahindra Finance, Iyer stated that the aforesaid company has already commenced joint ventures across the globe and their latest venture is with Ideal Finance. 

“Our (Mahindra Finance) interest is that we look at Sri Lanka as a great opportunity. We are trying to replicate what we have already started in 1994 as retail finance.”

Iyer stated that this rebranding of Ideal Finance is expected to contribute positively to the said company because Ideal Finance is already finely established in Sri Lanka and the name Mahindra is well-known in Sri Lanka owing to the relationship shared between India and Sri Lanka. 

At the same time, Mahindra vehicles exported to Sri Lanka have made “Mahindra” a household name on the island. Therefore, Mahindra Finance stepping into the finance industry jointly with Ideal Finance would be a signal of brands coming together for a common objective of having growth aspirations. 

Consequently, it would enhance customer confidence in terms of deposit confidence and regulator confidence. 

Speaking about MIFL, Iyer noted that in terms of its strategies of being a finance company, the first and foremost strategy for MIFL is to have a commitment to capital. In other words, this joint effort is looking forward to growing their upcoming balance sheet to go beyond their current $ 10 billion. 

Further, he stated: “We have a long-term aspiration to stay and grow business to a large entity and go for an initial public offering (IPO) of the company. In that direction, the company would be able to reach a significant capital commitment for growth. Thus, that would be the first strategy.” 

The second strategy is to penetrate into retail finance operations across the country by providing retail finance to the consumers in acquiring assets while providing them safe deposit programmes. 

MIFL has also identified the need of the people where they need conception loans, which is considered a priority product which contributes largely to the growth of that aspect of the business. 

Mahindra Finance is also set to bring leasing products that are provided in India through the Mahindra-Ideal venture as Mahindra believes that leasing would be an opportune product in rebranding MIFL. 

“We are looking at ease as an option rather than holding an asset as an option. So our immediate focus is not on growing the current products that are offered in the market. But we (MIFL) continuously look for innovative opportunities since our business model is built on an outside model,” said Iyer elaborating that MIFL is, in fact, looking at what the consumers want and need, and what they are looking for.

“Therefore, the company has the ability to design the needs of the customers. You will see new products from us on a regular basis following market research.”

Accordingly, the products Mahindra Ideal Finance offers to their customers are leasing and hire purchase deals, fixed deposits, pawning, and mortgage loans for immovable and movable properties. 

Mahindra Ideal Finance expects to open retail branches across the country which the company has already commenced on. In terms of retail branches opening, MIFL opened their fourth branch in the Western Province in Kadawatha making it their 17th and latest branch.

He also highlighted their need in investing technology as a mode of penetrating the market on a mass scale. In becoming a subsidiary of Mahindra Finance India, Ideal Finance has been able to pass the milestone of improving its credit rating along with new branches opening; however, he said that they are not going to be selective on locations to the extent that it affects their consumers, but Mahindra Finance expects to conduct a geographical analysis when introducing products. 

“By the last couple of months, we have been able to open eight branches. It is another milestone,” Iyer noted. 

Moreover, while appreciating his employees for their “phenomenal job”, Iyer said: “Our commitment to our employees is to provide the necessary training for future-readiness and make them absolutely competent.” 

At the same time, it is also a firm strategy as well as a commitment to the company in terms of growing the balance sheet. He further pointed out that the company’s anticipation of investing in technology and data would be meaningful in terms of its capital growth. 

Elaborating on the reason Mahindra and Ideal coming together, Iyer said “Ideal is a great brand locally,” and Mahindra is well-established in terms of providing financial services. Therefore, the two coming together would create a unique opportunity as Mahindra has had experience within India itself throughout their journey thus far. 

“We know for a fact that retail growth comes from like-minded entities where customer-centered service providers.”

Mahindra has been able to come for a rebranding and branch opening by being “Covid-19-resistant”. The Morning Business was curious about Mahindra’s recipe in facing the prevailing pandemic and adapting to the limitations posed within their work environment. Responding to this, Iyer said: “First and foremostly, we followed all the regulatory protocols and administrative guidance. Secondly we have to be empathetic enough to not only to look after employees of the company but also the family members of the employees because it directly affects them as well. Therefore, we did not push people (employees) to report to work unless the conditions are provided for them which makes their lives secure. Therefore, we took extreme care during this Covid-19 situation. The third is to provide vaccinations both in the aspect of the worker as well as their family.”

He explained that the company crucially believes that these steps are critically required. Nevertheless, it is fundamentally important to follow all precautionary protocols. 

Mahindra Ideal Finance would be unique from other licensed financial companies in Sri Lanka in developing products for retail customers across the country by understanding the needs of the customer and designing a product accordingly.

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