Asset financing NBFC, Shriram Transport Finance Company (STFC), plans to set up a wholly-owned subsidiary for conducting equipment finance business.
"We have obtained our Board approval and this business should be operational in the next 3-4-months," STFC's Managing Director, R Sridhar, told PTI here.
A leader in small-trucks and second-hand trucks financing, the company scents an immense potential in equipment financing business.
"Around 10 per cent of our total portfolio comprises of equipment finance and there is a huge demand for equipment. Hence, our decision to set up a subsidiary for this business," Sridhar said.
The subsidiary would mainly focus on construction equipment, he said.
There would be a capital requirement of Rs 100-150 crore and Shriram Transport Finance would be providing this, he said.
The company also plans to raise Rs 1,000-crore through issue of non-convertible debentures (NCDs) in tranches.
"We should be ready for the issue in about two months time. We will be appointing merchant bankers for this soon," Sridhar said.
Shriram Transport Finance's PAT in FY'09 surged 57.10 per cent to Rs 612.40 crore as against Rs 389.82 crore in the year-ago period. Its revenue in FY'09 jumped 49.72 per cent to Rs 3,692.43 crore as against Rs 2,466.19 crore in the year-ago period.
"We operate in the niche segments of small trucks and second-hand trucks financing and these segments have not been affected by the economic slowdown," Sridhar said.
Delinquencies for the company have been low, he said.
The company's gross non-performing loans stood at 2.1 per cent and net at 0.8 per cent, he said.