Tough calls deliver big payoff at L&T Finance

Leaner business, focus on return ratios make the company an attractive bet

Hamsini Karthik  |  Mumbai 

In an industry where it is tough to trim business verticals, L&T Finance Holdings has set an example of taking bold decisions. Until a year ago, the company was reckoned as an all-in-one financier. From there, it has axed more than half of its verticals, reducing its operations from 22 business verticals to just three major segments. It let go of lending, commercial vehicles, construction equipment, cars, leases, small and medium enterprises, etc.   This business re-engineering was done with the objective of improving its return on equity (ROE), and the company has set a target ...

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Tough calls deliver big payoff at L&T Finance

Leaner business, focus on return ratios make the company an attractive bet

In an industry where it is tough to trim business verticals, L&T Finance Holdings is as an example of having taken the bold decisions. Until a year or so back, the company was reckoned as an 'all-in-one' financier. From there, it has axed more than half of its verticals, thus reducing its operations from 22 business verticals to just three major segments, thereby letting go of lending to commercial vehicles, construction equipment, cars, leases, small and medium enterprises and so on. This business reengineering was done with the objective of improving its return on equity (ROE) and the company has set a target of 20 per cent by FY20. Trimming operations is already yielding the desired results. The company's ROE has improved from nine per cent at the start of the exercise in FY16 to 13 per cent in December'16 quarter (Q3). Operations are also structured towards this objective. For example, the rural financing segment focuses on farm equipment loans, two-wheeler loans and micro ... In an industry where it is tough to trim business verticals, L&T Finance Holdings has set an example of taking bold decisions. Until a year ago, the company was reckoned as an all-in-one financier. From there, it has axed more than half of its verticals, reducing its operations from 22 business verticals to just three major segments. It let go of lending, commercial vehicles, construction equipment, cars, leases, small and medium enterprises, etc.   This business re-engineering was done with the objective of improving its return on equity (ROE), and the company has set a target ... image
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