The Hindu Business Line : Shriram group to tie up with small finance cos

THE Chennai-based Shriram group will tie-up with "at least one hundred" small and medium non-banking finance companies for loan generation. The arrangement is expected to be completed this year.

The group's three major companies, Shriram Investments, Shriram Transport Finance and Shriram City Union Finance, are predominantly engaged in vehicle financing, with total stock on hire of Rs 2,445 crore (excluding off-balance sheet funding).

The three companies have funding arrangements with Citicorp, UTI Bank, ICICI Bank and Reliance Capital, under which either make available funds for disbursement by Shriram group, or buy securitised paper backed by Shriram's loan assets. Now, in order to generate loans in geographies that Shriram is currently not present in, the group is in the process of tying up with smaller financiers. These financiers will frontend the Shriram group — the group will provide funds and the financiers will generate loan assets. The Managing Director of Shriram Transport Finance, Mr R. Sridhar, told Business Line that the group expected to generate fresh loans of Rs 500 crore through this route this financial year.

The group focuses on used truck financing where it says the margins are good and competition sparse. Last year, the three companies of the group earned an income of Rs 635.75 crore, on which they made a net profit of Rs 91.48 crore.UTI Bank, Citicorp and the Dutch funding agency, FMO, have equity stakes in Shriram Investments and Shriram Transport. Shriram City Union is a joint venture of the group with the Kumbakonam-based private bank, City Union Bank.