Shriram Finance redraws biz plan, steps up focus on new vehicle finance

Shriram Finance is set to revamp its strategy, focus on new vehicle financing and boost growth as Japan's MUFG completes a $4.4 billion investment

Shriram Finance Ltd (SFL), one of the largest retail non-banking financial companies in India, is set to redraw its business plan by rolling out a new strategic outlook next financial year, alongside the completion of a $4.4 billion investment by Japan’s MUFG Bank. As per the roadmap, the company will place greater emphasis on new vehicle financing, a top company official told Business Standard.

 

Why is Shriram Finance reworking its strategy?

 

“As the business comes in during the next financial year, we will have a totally different business plan, which includes getting deeper into transportation financing, including new vehicle financing,” said Umesh Revankar, executive vice-chairman of Shriram Finance. This is seen as a strategy to retain existing customers who move out over time as they grow and require new vehicles or larger-ticket loans.

 

 

How will the shift impact growth and asset mix?

 

Revankar said that through this approach, the company’s assets under management (AUM) growth, currently around 15 per cent, is expected to rise to 18 per cent soon. The company’s total AUM stood at Rs 2.91 trillion in December 2025. According to a report by ICICI Securities, around 80 per cent of the company’s AUM mix comes from the wheels segment, which includes commercial vehicles, passenger vehicles, commercial equipment, farm equipment and two-wheelers. Of this wheels business, 97 per cent is derived from used vehicles, with new vehicles accounting for just 3 per cent.

 

“We have been doing mostly used vehicles. We would like to increase new vehicle funding. Our customers have been going to the competition. We would like to address them directly by offering better terms,” Revankar said. The report indicates that the company plans to double its new vehicle portfolio, currently at 3 per cent, over the next three years, focusing on existing customers. The current share of such customers who move out over time is estimated at about 30 per cent.

 

What role will MUFG Bank play in the transition?

 

Through what is set to be the largest foreign direct investment in India’s financial services sector, MUFG Bank will acquire around a 20 per cent stake in the country’s second-largest retail non-banking finance company. Shriram Finance is targeting the closure of the deal by the end of the current financial year.

 

Roping in the Japanese major is expected to aid the Indian firm’s future fund-raising efforts. “Because they are a bank, and more than a 100-year-old one with international best practices, there will be a lot of value addition on the governance front. On the technology side, they are ahead, being a bank with a presence in other Asian countries like Indonesia, Thailand, Vietnam and the Philippines. That is going to have some impact on the way we will go ahead with the retail implementation of our digital technology,” Revankar said.

 

“The third one is going to be on fund-raising. As they have a strong presence in the international market, we will be able to raise resources at much more reasonable prices going forward. It will be a huge positive within the next couple of years. One or two rating agencies have already increased our ratings, another one has provisionally increased,” he added. Earlier this month, SFL shareholders approved three proposals related to the non-bank lender’s deal with MUFG.