Shriram Finance Ltd.

Shriram Transport Finance Company (STFC), an NBFC arm of the Rs 30,000 crore Shriram Group is planning to infuse around Rs 1,000 crore in one of its subsidiaries, Shriram Equipment Finance Company (SEFC). The proposed infusion is to support SEFC’s diversification into infrastructure space. It may be noted, the company is foraying into the space which is presently dominated by Tata Capital, L&T Finance and others. STFC would also wait for RBI’s guidelines to apply for a license for bank status.

Shriram Transport Finance Corporation is planning to foray into infrastructure space. The company will not finance infrastructure projects, but construction equipments for these projects including cranes, crushers, mixers, road rollers and others. The company would lend to medium and small contractors, who are facing the supply and demand mis-match when it comes to funding.  Till 2008, source of funding for them was banks and multinationals, but after the financial meltdown these lenders have stopped from them and the customers have now started approaching the NBFCs. At present, some of the leading NBFCs catering to this segment include Tata Capital, L&T Finance, Religare, Bajaj, SREI and others.

According to the company, the industry is estimated to be around Rs 20,000 crore including new vehicle and used vehicle. The construction equipment finance segment provides significant growth opportunity and therefore the company has decided to intend to increasingly focus on construction equipment finance as a distinct business segment. So far STFC has infused around Rs 150 crore and during the present fiscal Rs 500-600 crore will be infused, of the Rs 1,000 crore, to reach the target of Rs 3,000 crore disbursements for the current fiscal.