TVS Motor Co Ltd, India's third largest two-wheeler maker, is planning to set up an arm exclusively to finance its two-wheeler customers. The new non-banking finance company, TVS Motor Services Pvt. Ltd, is expected to commence operations by the end of the current calendar year.
Venu Srinivasan, the company's chairman and managing director, said after the company's annual general meeting in Chennai yesterday that the company had approached the Reserve Bank of India for approval, which is expected to come in two months.
Until about a year ago, 50 per cent of the two-wheelers sold in India were financed, but that is now down to 15-20 per cent, TVS Motor chief executive K N Radhakrishnan said.
Last year, the company had de-listed its financing arm, TVS Finance, from stock markets, saying it would re-enter vehicle financing.
TVS Motor's 2008-09 annual report showed an investment of Rs60 crore in TVS Motor Services. ''We are investing in TVS Motor Services because we need a finance company as credit has dried up from banks for motorcycle sales,'' Srinivasan said.
July sales in the domestic market for TVS Motor went up 5 per cent. Still, that number was far lower than the growth of 30 per cent registered by industry leader Hero Honda Motors Ltd, which sells two-thirds of the two-wheelers in India. However, TVS says it is aiming at double-digit growth next year after setting up the financing arm.