The company has got all approvals to merge its vehicle company, Shriram Transport Finance and consumer finance company Shriram City Union Finance which was announced a year ago. Commercial and passenger vehicle loans together constitute 77% of the company Rs 1.71 lakh crore loan book.
CEO YS Chakravarti said in the next three years the company expects to increase the proportion of non vehicle loans in its portfolio to 40% as a result of which the vehicle loans will reduce to 60%. “Our MSME loan book is currently at Rs 17,000 crore, 90% of which are trading and services related. We expect to concentrate on this sector where we have some experience. We also expect to take gold loans to all our branches and increase it to 10% to 12% of our loan book in the future,” Chakravarti said.
Gold loans now constitute about 2.8% of the company’s loans. Shriram Finance has a total of 2875 branches and is present in all state in India except Nagaland. Together with rural centre and other small outlets it is present in more than 3600 locations across India.
Shriram Finance executive vice chairman Umesh Revankar said micro, small and medium enterprises make up 29% of the country’s GDP, 49% of exports and more than 63 million enterprises all across the country and there is still a large funding gap to this sector. He reiterated the company’s expectation of growing revenues by 15% at a compounded annual growth rate.
“Government incentives like GATI Shakti, the National Logistics Policy and infrastructure projects are also giving a fillip to sectors like commercial equipment and commercial vehicles with some segments like earth movers and cement mixers are growth at more than 60% year on year. Then there is the government plan to build 1.22 crore housing units which will also help growth in white goods and other consumer goods,” Revankar said.
Revankar said Shriram expects to maintain its net interest margin (NIM) at 8.3% despite the shift towards non vehicle loans. The company had a capital adequacy ratio of 23% and net NPAs at 3.4% at the end of September.