Shriram Transport Finance has decided to disburse value-added loans to its existing customers who want to expand their business beyond just commercial vehicles. “We have seen that 15-20% of our customers are becoming more enterprising and trying to be larger businessmen. We want to take this opportunity to finance them for developing warehousing facilities, carriage network, petrol pump, distribution etc. wherever they want finance,” said Shriram Transport’s MD & CEO Umesh Revankar, in an interview with Business Standard. For now, the collateral for the loan will be land or property, but the company is open to experimentation as and when the business matures more. “We want to be one-stop shop for our existing customers, who we know for at least five-six years. We won’t lend to new customers unless we mature in the business and understand the nuances,” Revankar added. The company has already started the business in a small way and the loan size is about Rs 300-400 crore, but the firm wants to scale it up to Rs 5,000 crore in the next two years.
Right now, the company is not financing for working capital needs of the new value-added businesses, but should be able to do that in the near term.“We are trying to see, by giving a bigger bouquet of products, how much more business we can generate ourselves. The idea is to generate revenues through multiple sources, and not just equated monthly installments,” Revankar said. Shriram Transport has 780 rural centres and 822 full-fledged branches. By 2020, most of the rural centres will be converted into branches. The commercial vehicle financer mostly gives loans for used commercial vehicles. It relies on peer networks and its own ground staff for recovery of loans. Presently, the transport finance arm has assets under management (AUMs) of Rs 66,000 crore and bad debt ratio of 4.3%. “The rural economy is not doing good. It is about 50% of our business, hence we are seeing some NPA pressure as some customers are seen delaying their payments,” Revankar said, adding while rural consumption is low, there was some pick up in coal, steel and infrastructure activities, which bodes well for the transport financier.