You have just increased your offerings. Can you just tell us about the new products?
The Piramal Retail Group intends to serve what we are internally calling the “budget customers of Bharat”.
They are essentially those with a smaller financial and economic footprint — those who live in small- and mid-town India. Let us call it city number 20 to city number 1,000.
Housing — particularly affordable/self-constructed housing — is a really important need for this segment. But there are a lot of other needs as well — they want to buy a car (usually a used car); they want to invest in their businesses; they want to do many other things. Our intent is to cater to those needs.
We are aiming to create a presence in all those products. After getting into affordable housing, we have since launched our small business lending propositions and have now topped them up with used car product propositions. We launched it most recently and we plan to invest more in it.
We believe that used cars are a very large opportunity in the country and globally as well. It tends to be even larger than new car financing.
So there is a lot of opportunity for us to do good business here. Also, this is not a business in which large banks have a particularly strong presence as of now. This makes it an area where NBFCs can go and create the right products and a good presence.
The company’s focus is on small- and mid-town customers. What are the current collection trends like?
Things were quite tough in September and a little bit of October. Since then, things have been improving steadily. Collections efficiency numbers in all these markets continue to get better.
Collection numbers of small businesses, which dominate small-town India, were getting better and better, we were getting close to near normalcy, people were starting to invest in their businesses, people were starting to buy houses and cars. However, this second wave put the brakes on it.
Now we’ve got to watch the situation carefully. If these disruptions last only a few weeks, then we will be back to the normalcy quickly. But if there are strict lockdowns for extended periods, then it can really peg us back.
If it persists, small business owners could see significant disruption in their work. If that happens, we will need to relook at some of the asset quality metrics.
So far the impact has been negligible — it was almost zero till the end of March. But now we got to wait and watch.
Is stress likely to continue due to localised lockdowns?
People are appropriately prioritising personal health over economic activity. That is exactly what you would expect at a time like this. And that is fine. As long as the wheels of commerce — supply chain linkages, etc — continue to chug along, I think we will be fine.
Small-scale lockdowns of local markets might not impact things a whole lot. The big worry is that employees, including in businesses like ourselves, are seeing personal health issues emerge. As there is a need to prioritise worker safety, it may come to shutting down local offices to make sure that your employees are safe.
Over time, all this starts to add on in case these things continue for an extended period of time. Like our PM said, we have got to appropriately balance
jahaan as we fight this battle.
How would growth prospects be going forward, where would the focus be?
We had a fairly successful FY21 and we want to build on that as we get into FY22. This interesting and tough year gave us the right opportunity to build business the right way.
This year, we increased our product propositions from two products to seven products. We increased our geography reach from 14 locations to 40 locations. We increased our employee base from about 500 to about a 1,000.
We want to build further on this. We expect to double our employee base again in the coming year. We also plan to launch at least 3-4 new products.
We added 26 locations last year. We are adding 10 more in the first quarter of this year. Then we will wait and watch as some of our inorganic strategies play out, and then take a call on further geography expansion. So, a lot has been planned in terms of growth in this financial year.