Rural India will be the next growth engine for used vehicle financer Shriram Transport Finance Company.

The Rs 40,000-crore company sees demand for financing of commercial vehicles coming more from villages with a population of over 10,000 rather than tier-II and III cities and metros. This is in the wake of improved rural connectivity in terms of road and Internet connections, prompting people in the villages to have their own vehicles to transport their produce to cities instead of depending on transportation from the cities.

“Right now the quantum of our disbursements to rural areas will hardly be two per cent. But we intend to take it to five per cent in the next two years,” Mr Umesh Revankar, Managing Director, said.

Last year, the company's total disbursements were Rs 19,000 crore, with a growth rate of seven per cent. It expects to maintain the same growth rate this fiscal despite the economic slowdown that has put the brakes on manufacturing and mining activities.

He said people in the villages were increasingly going for their own second-hand commercial vehicles, especially the smaller one-tonne carriers. This is only set to grow as India is set to connect 2.50 lakh villages through Internet broadband by 2014.

The firm, which entered the debt capital market today with an NCD of up to Rs 600 crore, says the initial feedback from the market has been encouraging. “However, we can guage the exact response at the end of the day,” Mr Revankar said.

(This article was published on July 26, 2012)
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