However, there has been no major demand coming from retail customers for its heavy commercial vehicles business, says Vellayan Subbiah, Managing Director, Cholamandalam Investment & Finance.
The demand for used vehicles business is beginning to look up, says Vellayan Subbiah, Managing Director, Cholamandalam Investment & Finance.
However, there has been no major demand coming from retail customers for its heavy commercial vehicles (HCV) business, says Subbiah.
Housing loans for the self-employed are likely to grow only bigger, as it is an untapped segment, feels Subbiah.
Subbiah feels the current cost of funds will go down in the near-term.
Below is the verbatim transcript of Vellayan Subbiah's interview with Reema Tendulkar & Nigel D'Souza on CNBC-TV18.
Nigel: How is demand looking currently in comparison to what you saw in the Q3 of last year?
A: The good thing for us is that demand is beginning to look up in two segments. One, heavy commercial vehicles, obviously everybody is seeing a demand uptick there but other than heavy commercial vehicles, we are also seeing demand increase in used vehicle business and it's very encouraging for us.
Reema: Could you expand more in terms of heavy commercial vehicle (HCV) space. Where are you seeing a pick up, for example in geographies?
A: In heavy commercial vehicles basically most of the demand that we are seeing is a replacement demand from larger fleets. We are still not seeing massive demand growth at the retail end of the spectrum. So that is what is happening on the heavy commercial vehicle side.
On the used side and that is why I said it's very encouraging, that is across the spectrum. We are seeing it in across geographies in this country, so that is much more an indicator that things will get better going forward.
Nigel: What would that mean in terms of disbursements for Q4 or as a trend?
A: We do not discuss Q4 numbers during quarter. You have seen trends for us; they have been fairly strong this year in general. So in general that strength seems will continue, but we do not discuss specific numbers in quarter.
Reema: Off late we have heard about a lot of competitive intensity picking up in the home loan market. How is it shaping up for your company? Have you seen a pick up or some sort of a pressure. What is the kind of assets under management (AUM) growth that we can expect?
A: We have two businesses. We have got housing loan business and we have got loan against property business, so I am not sure which one you were referring to.
The loan against property business basically has seen higher level of comparative intensity but we do feel that is temporary at this stage and so we do see performance in that portfolio beginning to improve in the coming year.
Our housing loan business for self-employed, that is a small book for us currently but I see a lot of growth opportunity there because self-employed in general has been a segment that is not been catered to adequately in the housing loan business, so we have just expanded that and we see significant opportunity for growth in that business.
Nigel: What is the current cost of fund and are you seeing further softening?
A: Definitely we can see cost of fund go down. If you take cost of funds currently, we are close to most banks' base rate and until March there tends to be kind of spike in terms of money market instruments like non-convertible debentures (NCDs) and commercial papers (CPs) but our belief is that we will go back to the segments in April timeframe and start picking up more significantly there. So we definitely do see cost of funds reducing in the coming year and that is another good trend for us as well in terms of the overall market.