Shriram Transport expects business revival in H2

Company has seen five quarters of flat growth; to beef up used car financing operations

After five quarters of flat growth till the second quarter of current financial year (July-September 2014), Shriram Transport Finance Company is expecting a revival in business, driven by the fall in diesel prices and a spurt in industrial and infrastructure activities. The initial pick-up revival, began with the festive season, is seen continuing.  

The main business for the company is financing of trucks (both used and new). “In the second half of the financial year, we are expecting a 10 per cent growth in our assets under management. The growth in the first half has been around three per cent,” said Umesh Revankar, managing director and CEO of Shriram Transport Finance Company.

According to the latest investor presentation, the assets under management of the company stood at Rs 53,102 crore as on March 31, 2014. “The demand is more for used trucks rather than new trucks. Diesel prices have come down, I believe the used trucks demand will go up further,” said Revankar.

There has been an increase in disbursements in the festive season. “The disbursement in the festive season (particularly October) was around 10 per cent more than the last year in the same period. Generally, consumption is high in the festive season. Our lending is mostly towards trucks,” he said.

The company is also trying to build scale is financing of personal cars (particularly second-hand cars) in the mid- to small-segments. “There are not many players in the second-hand car financing. We are also doing fresh car financing, but that is small. Most of these cars are in the mid- and small-segments. We are currently tapping the existing customers and once we perfect the model, we will also extend it to new customers,” said Revankar.

The company got into this in January and the ticket size of the loans is about Rs  2lakh. The rate of interest charged for these loans is between 17-18 per cent. “The assets under management will be around Rs 100 crore and by the end of this financial year, the assets under management may be about Rs 200 crore,” said Revankar.

The company is not planning to apply for a banking license. “Our model will not fit into any banking. Our model fits well into non-banking finance company. I am not preparing to become a banker,  it is a different ballgame altogether. To build that Current Account Savings Account (CASA) it will take 10 years. Till 10 years, I will be having no advantage of cost of funds,” he said.