Shriram Transport to up rural presence

Non-banking finance company, Shriram Transport Finance Company (STFC), is planning to expand its presence in the rural markets (villages with around 10,000 population) and expects to garner around 5 per cent of its total business from this segment by the end of this financial year.

Last year, the company’s loan disbursement portfolio was pegged at Rs 19,000 crore. Of this, around 80 per cent was generated from Tier II and Tier III cities and the rest from the metros.

“The contribution of the rural markets is low as we recently ventured into these markets with 200 centres. We have plans to add another 200 centres by March 2013, and with this we expect to achieve around 5 per cent of our business from there," Umesh Revankar, its managing director, said.

“There is a huge business opportunity for the used trucks segment in rural areas. The markets in northern states like Uttar Pradesh, Madhya Pradesh and Bihar have great potential,” he said. The rural centres, set up with an investment of around Rs 5 lakh, are managed by one or two employees.

“Our our loan disbursement grew only 1-2 per cent during the last financial year over previous year. But this year, the growth is picking up. We have already seen 7 per cent quarter-on-quarter growth in first quarter of FY13. We expect the same growth to continue,” Revankar told mediapersons.

Revankar was here to announce the Rs 300 crore NCD (non-convertible debenture) issue. The company is planning to raise Rs 300 crore issuing NCDs each with a par value of Rs 1,000 for lending, investments and paying off debts. The issue opens on July 26 and closes August 10. It offers return of 11.25 per cent for three years and 11.40 per cent for five years.

STFC’s subsidiary Shriram Automall is planning to add seven automalls by this year to its existing nine across the country, Revankar said.