STFC to hive of construction equip fin biz

CHENNAI: Shriram Transport Finance ( STFC), India���s largest asset financing NBFCs and a dominant player in financing second hand trucks, has lined of slew of initiatives to build up its portfolio through inorganic route. The company will work closely with small truck operators, dealers and other intermediaries and scores of private financiers.

STFC Managing director, R Sridhar told ET in Chennai it will leverage on its capability and experience in financing old trucks and partner with private financiers to grow the business. It will share the cost of vehicle with these financiers and help them in creating assets.

Besides providing them credit support, it will allow them to use Shriram brand, its network of 460 branches, marketing and technology. The revenue and profit from the business will be shared between STFC and the small financiers.
Sridhar said nearly Rs one lakh crore is required to replace the old vehicles in the market.

In all these years of its operations, Shriram is focused on addressing this market and has created assets under management of Rs 24,000 crore. Now, it wants to involve the small firms in the task as they have no access to public deposits or bank credit.

It has identified about 500 good financiers to provide support. In the first phase, it plans to cover 130 to 140 of them. Eventually, they will become partners in the businesses of Shriram group by cross selling products like insurance and mutual funds.

The other major activity this year will be organising more truck bazars in all the branches of STFC. The branches will become a networking platform for buyers and sellers of trucks and intermediaries. STFC will work these players and facilitate the transaction.

As Shriram gives lot of importance to valuation of assets, by partnering with unorganised players, it will drive the transaction market to become organised. This will be in addition to financing the vehicles, Sridhar explained.

He said the company will also be shortly getting into re-conditioning of trucks. For this, it is in the advanced of firming up a tie up with a leading independent brand neutral player in the automotive sector.

He said the slow down might have affected adding fresh tonnage capacity and thereby the financing of new commercial vehicles. The global melt down would have created problems like interest rate risk, liquidity crunch and delinquency problems.

As a result, STFC, which grew fast in the last five years, was hit since October last year. It was targeting to take its assets under management to Rs 30,000 crore in 2008-09 from Rs 19,000 crore. Now, it was estimated to have touched Rs 24,000 crore during the year.

However, STFC has not slowed down its business this year. It hoped to achieve the target ( Rs 30,000 crore) this year through the new initatives. " We stand out from other NBFCs in the field. We are a company directly financing our customers, who are small truck operators in buying second hand vehicles. When they want to upgrade into a new vehicle, they come to us".

He also said, " We have changed the mindsets of banks and financial institutions in supporting the needs of small truck operators and they are now providing finance to STFC. This has increased the size of its off balance sheet to nearly Rs 10,000 crore". It is also constantly on the look out for acquiring large HP portfolios.