Tata Motors Finance
Maintaining razor-sharp focus

One of the key value-driving aspects of the Tata Motors Group is Tata Motors Finance (TMF). Facilitating the financing process for customers and enabling the sales process, TMF plays a crucial role in supporting the sales of TML’s vehicles.

For a market like India, where consumers are facing a liquidity crunch due to multiple reasons, TMF has played a key role in improving consumer experience with better financing options. With more than 270 branches across India, Tata Motors Finance is the largest financier of Tata Motors vehicles – both CV and PV.

TMF’s mission statement has always been to realise our customers' dreams of owning Tata vehicles, which is also borne out in its customer segment covering the full spectrum of borrowers from first-time users and small business owners to fleet operators, dealers and vendors in the Tata Motors ecosystem. Drivers-cum-owners constitute a significant part of the CV segment. Many of TMF’s customers belong to MSMEs. TML, along with TMF, works diligently to support under-banked customers and aims to help them in augmenting their earnings and improving their livelihood by offering financing solutions to own a vehicle for commercial use.

The year witnessed a slowdown in automobile industry with falling sales and piling inventory amidst an overall slowdown in the economy, hike in cost of acquisition and ownership because of increase in third-party insurance, upward revision of road and registration tax by state governments and a rise in fuel prices. Transition from BSIV to BSVI, low growth in rural wages, NBFC crisis impacting credit flow and the crippling impact of the COVID-19 pandemic from mid-March. As a result of which, FY20 disbursements slowed down by 32% to I15,029 crore. AUM as on March 31, 2020 stood at I36,881 crore, as compared to I38,311 crore in the year earlier. Collections were also impacted, leading to increase in Gross Non-Performing Assets (GNPA) by 250 bps to 5.1%. TMF’s market share improved by 376 bps to 30%. PBT for the year grew by 21% to I149 crore as against I123 crore in FY19.

TMF realigned its strategy by taking the asset-light route. It meant disbursing in the form of financial warehousing, subsequently curating the assets for six months and then selling to market participants, which are mostly public and private sector banks. TMF continues to collect EMIs from original borrowers in the capacity of a collection agent for the assignee (bank). During the year, TMF securitised/assigned I9,325 crore worth of financial assets.

TMF revisited its organisation structure to create a fit-for-future customer-centric entity focused on digitisation and operating efficiencies. As a result of which, cost to income ratios declined from 65% in FY19 to 49% in FY20.

While FY20 remained a difficult year for most NBFCs, from a liquidity standpoint, TMF managed to maintain a comfortable liquidity position during the year and diversified its liability franchise by raising External Commercial Borrowings (ECB) of US$250 million (including US$100 million from the IFC), establishing fresh limits with SIDBI and MUDRA, and establishing new relationships with multinational banks like ANZ, Barclays, DBS, CTBC and KDB.