Shriram Transport Finance Co Ltd, flagship company of the Shriram group, is betting big on its new areas of growth, which include financing of farm equipment and new passenger vehicles.

There is a general feeling that infrastructure and farm sectors will start looking up from the third quarter of the current financial year. And, given the company’s focus on financing less-than-five-years-old commercial vehicles, new sub-one-tonne commercial vehicles, small passenger vehicles, and used tractors, “we are vying to ride the impending growth wave,” said P Sridharan, Executive Director, Shriram Transport.

Elaborating on the company’s plans to broad base its product portfolio, he said that though some parts of the country are wary of drought setting in, there seems to be reasonable rainfall in the southern and eastern parts. Even agricultural activity in some parts of the country would require transportation. Besides, mining activity seems to be picking up and infrastructure is expected to get a shot-in-the-arm in the forthcoming Budget. “However, our mainstay will be funding for vehicles which are five to seven years old,” Shridharan said.

To expand its customer base, the company recently started partnering with local private financiers, who still command close to 70 per cent of this business. “Instead of competing with them, we partner with them. The private financier will bring in the customer, verify his credentials, we provide finance and share profits with our business partner.” The company has so far tied up with 500 such business partners and has built a portfolio of ₹4,800 crore. “The delinquency in this model is also much lower,” said Sridharan.

In addition, the company also proposes to enter the used medical equipment market through its subsidiary Shriram Equipment Finance Co, which currently focuses on used construction equipment financing. “We are studying the medical equipment market and hope to venture into it soon,” he said.

On the company’s asset quality, Sridharan said that though it had experienced poor recovery during the last few quarters, the situation has been improving. There had been two tranches (in the second half of January and June) of five to seven per cent increase in freight rates, which benefited customers and finally turned out to be favourable for the company. “Now, the worst is over. We have been seeing good recovery since mid-January,” Sridharan noted.

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