Bajaj Auto veterans to start a finance company specifically targeting used two-wheeler segment

Although India boasts of one of the largest automobile manufacturing and financing industry, the second-hand market is still fragmented and under penetrated. Though the used-car market still has some traction, the used two-wheeler market is nowhere on the ground. To tap this potential, Srinivas Kantheti, former executive in Bajaj Auto, and his partners have co-founded a startup WheelsEMI to lend financial support to the segment which is already pegged at 17 million units and growing at double digits annually. Analyzing the potential in the space, the start-up has already got series ‘A’ funding from Mauritius-based private equity major Elevar Capital, and the series B funding is slated for the second half of this year. The startup is also looking to tap another PE company for further funding.

Srinivas, co-founder of WheelsEMI, thought of entering the market after doing the necessary due-diligence. What he found was that only 2-3% of the market is addressed by formal financing and that too by online portal. Thus, he decided to venture into this territory, and acquired Vardnarayan Savings and Investment Co Pvt Ltd., a small finance company from Maharashtra’s Nanded with a loan book of INR35 lakh. The four executives infused INR4 crore into the company before reaching out to the Mauritius-based PE fund Elevar Capital for funding. Within three months, they got the funding and all the clearances from the central bank.

The co-founder added that “Operationally it is a very challenging game. You need to keep the cost under control, and on a ticket size of Rs 35,000, we must check a customer’s history, CIBIL record, etc. So, one needs to know how to operationally run a very tight ship”.