CANON PLANS TO SET UP FINANCING ARM IN INDIA

Surabhi Agarwal
The Financial Express

Canon India, one of the leading players in imaging technologies globally, is mulling setting up a financing subsidiary in the country. This will be on lines of its operations in other countries like Australia and Canada, where it has a separate company to take care of its financing and leasing-related work. To start with, the company will set up a separate financing division within the company by beginning of 2009.

“Till now, we were handling the leasing contracts for our equipment business internally. However, this could expose us to greater credit risk,” said Alok Bharadwaj, senior vice-president, Canon India. He added that with the company aggressively looking at this model of doing business; a separate company will have better expertise to study the risk element of the proposal.

As of now, Canon only gets around 5% of its copier revenues from leasing, but a lot of companies are warming up to the model now. He said that in the commercial space, the demand for renting equipment is almost 100% and the market is worth Rs 200 crore. “In the corporate segment, a lot of large corporations and global accounts are looking at this option,” said Bharadwaj. He added that almost 50% of the products sold in the mid to high range could be potentially leased out.

“The charter of the company will be completely of a financing company and it will have its own operations and constitution. Moreover, it will have a different auditing process and government control,” added Bharadwaj. He said that legal implications of the same and the effect on the company’s balance sheet are under study currently.