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Financing that meets Aspirations

Intro: Devang Mody, president of Consumer Business at Bajaj Finance, speaks about the company’s product strategy and expansion plans:

A typical Indian customer meets his normal needs through his income, but he needs financing to meet his aspirations, says Devang Mody, President of Consumer Business at Bajaj Finance. “I don’t think luxury has anything to do with well-to-do,” says he, citing the instance of his company, which has flat panel TVs as its largest category for financing.

“There are 3 categories of flat panels TVs which industry monitors – 42-inch and above, 32-42-inch (which constitutes 35% of the industry) and below 32-inch. Our financing is 4x for 42-inch and above compared to industry as a whole. Almost 35-40% of all 42-inch and above TVs are today financed by us. Our share is less than 7% in the 32-inch and below category. As the value dips, the need for finance too dips as the customer feels why to go finance for such small amounts.”

Mody says the company offers finance for various lifestyle products. “Financing consumer durables forms 21.5% of our revenues. We estimate that our consumer durable business covers 20% of the market share. We do a fair bit in financing phones. We also do musical instruments, but the numbers are very small,” he elaborates.

REACH & GROWTH

Mody mentions that Bajaj Finance is present in 140 cities and towns – places having a population of 3 lakh and above – offering various loan products for consumer durables as well as corporate loans of Rs 150 crore. In addition, it also has a dedicated structure for rural business. Besides, the company is also present in 150 towns with under 1 lakh population.

He points out that cities are expected to grow faster and as the growth happens Bajaj Finance also fares well. “We have two third of our business in the top 15 cities. We now want to re-focus on 15 of the top 150 cities and the attempt is to grow faster there. The volumes there are low and we want to grow exponentially. The solutions that these cities need are different. The banking infrastructure and consumer readiness are different. Growing in the smaller markets is relatively easy because the volume of business is least for us,” he says by way of explanation.

AREA OF OPERATIONS

Today, Bajaj Finance is a diversified NBFC and a subsidiary of Bajaj Finserve has interests in consumer lending, SME lending and commercial lending. It has some 14 product lines divided into three major verticals – loans, wealth management products and insurance products. In loans, it targets salaried professionals, self- employed and companies, with products spanning credit card, durable loans, personal loans, home loans, gold loans, automobile loans, doctor loans, loans against various securities, etc. The company claims to give an online approval in as less as 5 minutes.

The company appears to be shying away from offering gold loans. But Mody does not think so. He says Bajaj Finance has substantial secured mortgages business. “The ticket size is small for this product. I can’t service a Thane customer having my office in Goregaon. The customer will have to apply for leave to visit a distant office. We have chosen to have our business centered in large cities rather than have a pan-India coverage using high tech. In rural areas we do a variety of consumer loans, business loans and also some gold loans. We do gold loans in places like Kopergaon (towns with less than 1 lakh population) rather than Mumbai. It is a large asset class in smaller towns. We are also present in several major cities in Kerala but not in gold loans. Our major competitors are large banks like HDFC Bank. Personal loans and credit cards are different products with different dynamics,” says he.

SUCCESSFUL EVENT

One of the landmark events organized by the company is the Great Indian Summer Festival. It had organized the event for 2 consecutive years, the first year itself seeing huge success. The three-month event has participating brands like Samsung, Godrej, LG and Panasonic with deals and discounts.

Participants can also win prizes including Hyundai Grand i10s, Europe trips, Bajaj Pulsars, smart phones, JBL speakers and cash back up to Rs 10,000.

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