The COVID-19 pandemic presented extraordinary challenges for businesses across sectors. With frequent lockdowns, the impact was far greater on the automotive and allied industries, particularly transporters, fleet owners and logistics/supply chain service providers. At Tata Motors Finance, the management knew it had to act beyond the traditional realms of vehicle financing.
In the last five years, Tata Motors Finance (TMF) has grown its Assets Under Management from Rs 17,000 crore to Rs 43,000 crore. The growth has been primarily driven by vehicle financing for customers and channel financing for TML dealers. But during these difficult times, TMF has been agile and is scaling up with its startup mindset to empower its customers with unique financing solutions.
“We had to meet end-to-end customer requirements, do whatever vehicle owners and drivers would need to keep their vehicles running,” says Samrat Gupta, CEO and MD, Tata Motors Finance.
“Post lockdown, it was very essential for us to ensure that the vehicles had to be running to generate income that would enable the owners to pay their regular EMIs (Equated Monthly Instalments),” he adds.
TMF had already digitised a pathway for 400,000 customers to opt for the six-month moratorium that the government had announced. 70 – 80 percent of its customers are first-time users or owners in the transport business. It was important for TMF to support its customers with lifecycle products as cash flows were very critical for them.
Hence, TMF introduced loans for operational expenses such as fuel, tyre and Fastag. “Lifecycle products cover whatever the customer may need for the functioning of business from start to finish. It is the future, developed to ensure the vehicles keep running and that there is all-round support for the customers,” says Samrat.
As far as borrowing from the market or raising equity from parent company or investors is concerned, Ridhi Gangar, Chief Financial Officer, TMF, assertively mentioned “Growth is like Goddess Lakshmi – always welcomed. The strategy for the same is based on two structures which include an asset light model where the customers are sourced and housed by TMF and downsell the loan to the banks, giving a win-win situation to both us and the banks. Second strategy is to tie up with the bank and become their collection and sourcing agent and the loans will be housed on the bank balance sheet. This helps us because we are close to our customers and banks are close to cheaper funds, thus co-origination and co-lending strategies help us in the growth of the organisation.”
TMF invokes its startup playbook
Samrat has distilled the TMF playbook into the five Ds—Develop, Digitise, Diversify, Divest, and Deliver.
Develop: On how TMF is empowering its employees, Samrat says, “Our focus is on developing our people as complete bankers. We want our bankers to understand the complete life cycle of the customer that goes beyond just vehicle financing.” We also worked on developing our products and focused on emerging as a cash flow financier and not just financing against the collateral, basis the requirement of the customers.
Digitise: Digitising would lead to faster turnaround times, and efficiencies in the loan approval processes. TMF launched a credit approval bot called TIM, and harnessed its reach to 17,000 pin codes digitally.
“Through digitisation, we are trying to provide customers with a hybrid model which will cover physical as well as digital modes, giving comfort and ease to customers with wider reach. As our customers moved to digital platforms for easy processing and convenience, we launched our products,” says Samrat, adding that fuel loans are completely processed on its app.
Diversify: “We believe our used vehicle book is only 5,000 crore and life cycle products such as fuel financing is only 200 crore, so, there is a huge potential for these sectors to grow. Our aim is to diversify into these sectors,” adds Samrat.
Divest: The CEO & MD believes, “We are financial warehouses where we first curate the asset for the first six months and then sell the same to the banks.”
Deliver: As an organisation, we want to deliver strong customer loyalty, accompanied with employee well-being. “We are ROE focused as well. While our customers make money, we would also like to scale to satisfy our shareholders,” shares Samrat.
With these five Ds, TMF aims to break the stereotypical label of a vehicle financing company and serve the logistics industry at large.
TMF has had the trappings of a lean startup. “COVID-19 became the biggest push for digitisation,” asserts Anand Bang, Chief Operating Officer – Sales & Marketing, TMF.
Nation building through money lending
Samrat focuses on building more entrepreneurs for the country, as the organisation’s focus is on supporting MSMEs.
He says, “Our objective is very simple, to fast forward the future for our customers”
“Commercial vehicles are an income earning asset. With our years of experience in commercial vehicle financing and risk management practice, we learn about the inclination of the customer to pay and fast forward their business. Hence, we were successfully able to kickstart this journey of entrepreneurship of over 1.5 million customers from the last 10 years who are our first-time users,” explains Samrat.
TMF aims to tie up with fintechs as they not only help in better turn around time, but also make the credit decisioning better. It can provide support in terms of analytics, analysis of balance sheets,bank statements etc.
Samrat further asserts, “We have Turbo as our loan origination system, which includes 10 to 15 APIs tied up with fintechs providing financial analysis and assisting in giving better and faster credit decisioning.”
“Even though Tata Motors Finance has a legacy of over 60 years, we are drawn to our startup spirit, and would move towards the journey of becoming lifecycle financiers for our customers, which keeps us connected and relevant to our vision of “Enabling Economic Success, Fulfilling Aspirations,” he concludes.
