STFC to raise Rs 500 cr through debentures
Shriram Transport Finance Corporation (STFC) is planning to raise Rs 500 crore through retail non-convertible debentures (NCDs). This will be company's third NCD since July 2009. The company wants to bring down its exposure on floating credit, towards which it is planning for one more NCD, according to a senior official of the company. Speaking to Business Standard on the sidelines of the company's 31st AGM here on Thursday, R Sridhar, managing director, STFC said that in July 2009, the company had offered NCDs to the public, raising around Rs 1,000 crore. Another issue was undertaken in May this year in which the company had raised Rs 500 crore.
“By the end of the current year, we are planning for one more NCD to raise around Rs 500 crore," he said. "We lend money on a fixed interest rate to our customers. Similarly, we would like to borrow money, for lending, at a fixed interest rate.”
A year ago, 50 per cent of the company's borrowings were through fixed interest rate, which has now come down to 25 per cent. “We are now out of interest rate fluctuation risk and our NIM will not be affected,” said Sridhar.
“We also create long term investors, thought it is a bit expensive. But the advantage is stability and it would help us strengthen our liability.”
In 2009-10, the company securitirised its assets worth Rs 8,757 crore, a two-fold rise compared to 2008-09. The outstanding securitirised assets portfolio stood at Rs 11,800 crore as on March 31, 2010.
“Securitisation enables the company to access low-cost funds since it funds STOs which are classified as priority sector by the Reserve Bank of India. At the same time, securitisation also allows the company to substantially mitigate the interest-rate risk since the rates are fixed. This enables the company to immunise the business from change in interest rates.”
External borrowing of the company had came down from Rs 20,121 crore as on March 31, 2009 to Rs 18,460 crore on March 31, 2010, according to the company's annual report.
The company has a mix of retail deposits and institutional funding with retail liabilities constituting 17.7 per cent of the total external borrowings (against 15.7 per cent as of March 2009) and loans from banks and institutions accounting for 82.3 per cent (84.3 per cent).
Total assets under management (AUM) of STFC in 2009-10 were Rs 29,126 crore, a growth of 25 per cent over the previous year. The company had said 76 per cent of the total AUM is in the pre-owned CV category and the rest is in the new CV category. The company had set a target to increase the AUM to Rs 50,000 crore by 2012-13.