After reeling under the impact of Covid-19 pandemic in the first half (H1) of FY21, Shriram Transport Finance Company Ltd (STFC) is expecting its business to be back on an even keel in the second half (H2).

The nearly four decades old non-banking finance company, which specialises in financing pre-owned trucks, will step on the gas in H2 (October 2020 to March 2021), eyeing nearly three times H1 (April to September 2020) loan disbursements, opening 100 branches in rural and semi-urban areas and hiring 1,000 people, Umesh Revankar, MD & CEO, told BusinessLine in an interview.

Business is nearly back to pre-Covid-19 levels, he said. Excerpts:

Has normalcy been restored to your business?

I feel business is back (to normal). Credit is picking up and collections have improved month-on-month since June 2020. The biggest demand is for vehicles involved in activities such as agriculture, e-commerce, and FMCG. So, light commercial vehicles, tractors and passenger (personal) vehicles are in good demand. Further, demand for construction equipment is going up and that is definitely a positive sign.

Also read: Shriram Transport Finance Q2 net profit at ₹684.56 cr

Your new vehicle AUM (in H1FY21 vs H1FY20) is down but used vehicle AUM is up. What is the reason for this?

New vehicle sales virtually dropped or stopped. When a vehicle operator’s cash flows are not certain and he does not know how business will happen, he will go for the safer option ― buy a used vehicle. The ticket size of a used vehicle is 50 per cent of a new vehicle. So, he will be having same earning with a vehicle by investing 50 per cent of the amount. This trend may continue till March 2021. Demand for new vehicles may be much better next year.

How many of your customers have sought restructuring?

We have not offered restructuring option to every one. We identified the segments which have been affected. These segments include staff transportation (because the operations of most of the multinational companies, call centres and information technology companies have not started), school buses and travel & tourism vehicles. But remaining businesses are up and running. We expect up to 3 per cent of our total assets under management (AUM) to come up for restructuring. So, we have started working on that.

How much did you disburse under the Government’s Emergency Credit Line Guarantee Scheme (ECLGS)?

We have disbursed about ₹600 crore to about 69,000 customers under this scheme. Our credit under this scheme may touch about ₹800 crore by December-end. We are giving loans under the scheme only if they are within our loan-to-value (LTV) norm and not just because there is a government guarantee. We are answerable for the money given. We don’t want to claim from the government. That is not the idea.

Also read: Shriram Transport Finance raises Rs 100 cr via NCDs

What will be your AUM growth for FY21?

We should grow our AUM by 5 to 6 per cent year-on-year. In H1 also, there was a yoy growth (of about 5 per cent) in total AUM. But it was mainly because of the moratorium. When EMIs are postponed under the moratorium, the AUM remains stable. I can tell you very confidently that disbursements in H2 will be at least three times that in H1.

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