 "Shriram")
Moving in line with the expected growth in GDP numbers next fiscal, Shriram Transport Finance Company (STFC) expects the vehicle financing segment to see higher growth and recovery in 2022-23.
"GDP growth pegged around 7-8 per cent. Automatically there has to be credit growth of 15 per cent. Next year we will be able to see higher growth and recovery will happen soon. STFC is already back to pre-covid level," said Umesh Revankar, Vice Chairman and Managing Director. With a customer base of over 2.1 million, STFC has around 27 per cent market share in pre-owned commercial vehicle financing and over 8 per cent in new truck financing. Revankar added that though the company's numbers have touched the pre-Covid level, higher growth depends on the overall market condition.
Based on data available with the Society of Indian Automobile Manufacturers (SIAM) data, domestic CV sales saw a 30 per cent increase during the April to December period of the current fiscal to 4,66,763 units as compared to 3,58,203 units during the first nine months of the last financial year. "I believe the demand for used and new will improve. With BS-VI emission norms, improvement in technology and steel price increase, the price of vehicles has increased. That will increase loan ticket size and will automatically increase the price of the assets," he added. STFC at present has around 2,640 branches and has added around nine branches during the last quarter.
STFC had posted a six per cent decline in net profit for the October to December quarter of the financial year 2021-22 to Rs 681 crore as compared to Rs 728 crore during the same period during last fiscal. The RBI's NPA clarifications requiring daily stamping of NPAs and upgrading NPAs to standard status only on complete repayment of overdue had a considerable effect during the quarter. "Earlier, we had a time till month-end. Because of this, there was an 80 basis point increase in Stage III and had an impact on the profit," Revankar said. Had the Company followed the earlier method, the profit before tax for the quarter and nine months ended December 31, 2021 would have been higher by Rs 355 crore.
STFC also sees no impact of the RBI's prompt corrective action (PCA) framework as it is treated at par with banks. Revankar added that the third wave of Covid also had no impact as its business is going on as usual compared to the first and the second wave of the pandemic.
Last month, Shriram Group had announced the merger of Shriram Capital Ltd (SCL) and Shriram City Union Finance Ltd (SCUF) with Shriram Transport Finance Ltd (STFC) creating the largest retail non-banking financial company (NBFC) in India named Shriram Finance Ltd (SFL). This merger would bring together all its lending products – commercial vehicles, two-wheeler loans, gold loans, personal loans, auto loans and small enterprise finance.
