Speaking to CNBC-TV18, Sudarshan Venu, MD of TVS Holdings and MD of TVS Motor, talked about the new acquisition and its importance for the TVS Group.
Venu said, “This acquisition focuses more on consumer durables and personal loans, in addition, Home Credit has a very good distribution and digital app. It also has a large customer base which represents a huge cross-sell opportunity for new products like gold, other personal loans, auto loans, and education loans as well. I think it also represents a large focus on new to credit customers with a very good distribution and that is something that we will really look to capitalise on.”
Read the verbatim transcript of the interview.
Q: What are the kinds of synergies that we can expect between TVS Credit and Home Credit India Finance?
A: There are definitely synergies in terms of collections, the tech stack we are developing, AI that we will leverage to serve our customers better and the digital assets and digital infrastructure. There are also synergies in terms of costs, cost of funds and sourcing of funds. And lastly, there will be a huge amount of cross-selling opportunities. So, the combination will create very good synergies where Home Credit can focus on its existing customer base, but also leverage the strengths and synergies of being part of the TVS Holdings Group.
Q: When it comes to mergers and acquisitions can we say that you would be looking out to acquire more entities in the credit finance business, be it in home loans, gold loans, or health insurance for that matter?
A: I think our focus is to cater to the chosen customer segments with good quality of credit, in a profitable way and to continue to grow. As part of that, we will grow organically, largely. As we find good opportunities, we are open to inorganic ones as well like Home Credit, but I think the focus is really on the customer segment, the quality of credit and running a profitable operation which grows at the right pace, and with the right levels of risk.
Q: In terms of your expansion plans, there is a customer base that Home Credit Finance already has. These two group companies TVS Credit and Home Credit Finance, how would you like to expand them across the country over the next three to four years any targets that you are setting?
A: Over the next three years we would like to take the book to ₹50,000 crore combined. We would like to maintain the Home Credit brand for a period of time to focus and cater to the new credit customers with a larger rural focus than TVS Credit presently has and leverage the distribution but also the phygital distribution, both physical and digital.
Q: Coming to your automotive business in terms of electric two-wheelers, and electric three-wheelers how would you expand your portfolio this year?
A: We are looking at a full range of electric vehicles. So, you already have a new iQube coming soon. We have launched TVS X at the top end of the market, there will be one more electric scooter this year. And also we are looking at a huge opportunity with transportation and logistics. I think three-wheelers will focus on both cargo and passenger segments. And we are also looking at electric bicycles and at some point in time, there will be an electric Norton as well. So we will have the complete portfolio of electric vehicles which we believe is very important for our future.
Q: What about the electric Norton when would you like to bring it to the market?
A: We will start first with a four-cylinder Norton next year, and then we take it from there.
Q: In terms of capacity ramp-up, is there a plan to increase production considering that you are a strong number two in the market, but you have the likes of Ola, which has almost 50% of the market right now? What would be your strategy to grow capacity in the months to come?
A: We will definitely set up capacity very soon within this financial year for 50,000 vehicles a month.
Q: Finally, what would be your outlook for TVS Motor Company in FY25? You registered your highest-ever revenue and profit in FY24. How do things look as of now, rural versus urban, the market sentiment and what will be your big priorities in terms of growth of the company this year?
A: <any of the steps taken by the government to ensure economic growth, the fastest growing large economy in the world, and keep inflation under control bodes well for the automotive business and two-wheeler demand which I believe over the next two years, will come back to its lifetime high and also for financial services as well, which is where you see us doubling down.
TVS Motors will continue to look to grow ahead of the industry and has some exciting launches lined up. I think the business in Africa which is quite large is also bottoming out and things will improve from here on. As far as India is concerned when demand is good rural demand also is picking up with the monsoon so we are optimistic.
