With a growth target of 25-30 per cent for the next couple of years, non-banking financial services company Shriram City Union Finance Ltd plans to raise Rs 1,000 crore through an issue of debentures and other debt instruments this financial year.

“This would support our disbursement target, particularly to the non-corporate sector,” said G. S. Sundararajan, Managing Director of the company.

At present, the micro, small and medium enterprises sector constitutes 46 per cent of the company’s loan book, “and we want to increase this to 60 per cent”, he added.

Credit rating

He said the MSME sector, comprising over 2.6 crore units, accounts for 17 per cent of the country’s gross domestic product.

However, their access to bank loans is limited for want of good credit rating. “But, in my opinion, the lending risks attributed to the MSME sector is not as large as it is made out to be,” he said.

Elaborating on this point, Subhasri Sriram, Executive Director and CFO of the company, said getting a credit rating, in a way, acts against the interests of MSMEs.

Rating agencies largely depend on data on paper which the MSMEs do not maintain properly.

The net result is that the rating agency would give a lower credit rating, and banks would offer loans at higher rates of interest, she said.

Home loans

The company is keen on growing its housing loan portfolio, too. According to Subhasri Sriram, the company has so far sanctioned Rs 220 crore, and it hopes to double that in the current year. “We target Tier II and III towns with a ticket size of around Rs 10 lakh,” she said.

For the first quarter of 2013-14, the company posted a net profit of Rs 117.42 crore, a growth of 13.54 per cent compared with Rs 103.42 crore in the corresponding previous-year period.

The total income from operations stood at Rs 788.37 crore, up 17.22 per cent from Rs 672.58 crore last year.

ravikumar.r@thehindu.co.in

Related Topics
comment COMMENT NOW