The new company wants to bring this ratio down to 60 per cent in the next two-three years and further bring it down to 50 per cent in the next five years, said Umesh Revankar, executive vice-chairman and managing director of Shriram Finance, led by YS Announcing the operationalization of the new unit, Director and Chief Executive Chakraborty told reporters here.
The employee-owned Shriram Group had last December announced the merger of Shriram Transport Finance, the industry leader in used vehicle finance, and its NBFC arm Shriram City Union Finance, creating Shriram Finance, the country’s largest retail non-banking finance company (NBFC) with assets under management of over Rs 1.71 lakh crore and a net worth of Rs 40,900 crore and in the first half 2,900 crore has a net income of Rs. current finance.
In FY22, it had a net income of Rs 3,500 crore. Shriram Capital was the holding company of these two operating entities. The new company will be headquartered in Mumbai, serving over 6.7 million customers in over 3,600 branches across the country, except Nagaland, by 57,000 employees, of whom 3,000 have been hired since the announcement of the merger.
“Shriram Finance today is the largest retail NBFC with a loan book of over Rs 1.71 lakh crore and 6.7 million customers. While announcing the merger last December, we had guided for 15 per cent top line growth and 10 per cent bottom line expansion. And I’m pleased to say that we’re well on our way to improving on those guidance, Revankar said.
On the back of improving overall economy, the company is witnessing exponential growth in key business verticals. Revankar said total loan sales have grown 35-45 percent since the merger was announced, with prime commercial vehicles up 46 percent and construction equipment finance up 64 percent.
Although the company is optimistic Regarding the rapid growth of the construction equipment finance segment due to the government’s push on infra, Chakraborty said, however, the firm is looking to balance the growth metrics and reduce dependence on the vehicle finance vertical.
Giving the asset break-up, he said 60.5 per cent is from used vehicles (commercial vehicles), passenger vehicles 17 per cent, MSMEs 11.5 per cent, personal loans 3.2 per cent, gold loans 2.8 per cent and 5.3 per cent. Two wheeler financing. He said that 99 per cent of the commercial vehicle portfolio is for used vehicles only.
Chakraborty stressed that while the company tries to balance the asset portfolio, it will try to develop all business segments such as financing of commercial vehicles, MSME, personal loan, gold loan or vehicle loan as per the market demand .
And going forward, Chakraborty wants to take the gold loan portfolio to 10-12 per cent from having a limited branch offer only for existing customers, to offering the facility across all its branches. Similarly, he wants to expand the MSME book in a big way. But he didn’t set a portfolio size for it.
Chakraborty, however, ruled out involvement in consumer finance, MFIs and co-lending with fintech players for rapid growth.
While Shriram Transport Finance is the largest financier of commercial vehicles (mostly used vehicles), Shriram City Union Finance is the largest two-wheeler financier and a leader in micro, small and medium enterprise lending.
Revankar, who has been heading Shriram Transport Finance for decades, said the merger is a natural culmination of a journey of 43 years.
“With the balance sheet strengthened through the merger, we can better meet market needs by bringing in more products and help customers access credit faster,” he added.
The Shriram Group was founded in 1979 by R Thiagarajan, but today it is owned by a trust whose members are the employees of the group. The promoter group does not take any profit from the group companies, not even royalty.
The group also has a life and general insurance vertical, a realty branch, a chit fund, asset management, stock-broking, distribution of financial products and wealth advisory services.
At a combined level, Shriram Group has a total customer base of over 22.5 million, approximately 79,100 employees and 4,000 branches. It had a net profit of Rs 5,360 crore by March 2022 with assets under management of over Rs 2.16 lakh crore.
Shriram Finance also announced the appointment of Jugal Kishore Mohapatra as the chairman of the company and Maya Sinha as an independent director.