Shriram City Union Finance Ltd (Shriram City), the non banking finance company, is planning to extensively increase its presence in north, west and central India with the money it is set to raise through non convertible debentures (NCDs).
The NCD issue of the Chennai-headquartered company will open on August 11 to raise Rs 700 crore. At present it has an asset under management of Rs 8,000 crore. The company is set to open a new office in Kolkata too. “Shriram City and Shriram Housing both will be setting up offices starting with Kolkata and then in other parts of the eastern region this year”, said CEO and Managing Director, Shriram Housing Finance.
Krithika Doraiswamy, assistant general manager, Resource mobilisation and Investor relations, of the company said, “We are extensively present in the four southern states like Chennai, Kochi, Maharashtra and with this money we will invest in northern states like Punjab,Haryana, strengthening our western operations and central regions of the country where our presence is low, we collectively have only 200 centres in these zones. Our present spread is 1:7 with regards to loan portfolio between north and south zones.” The current borrowing cost for the customers is 20-22 per cent. The money will also be used for repayment to banks.
The lead arranger of the issue are J M Financial, A K Capital Services, ICICI securities and Karvy investors services ltd.
The company's first product offering from any new center is the 2-wheeler vehicle loan. Its loan disbursement is spread across five segments, which include loan against gold with an exposure of 27.57 per cent, loan to MSME where it expends 24.42 per cent, pre-owned and new vehicle loans where it disburses 24.20per cent of its portfolio, product finance loan and personal loans. It is expecting to disburse approximately Rs 1000 crore per month in this financial year as compared to Rs 600 crore last year, Sinha added.
Shriram City has a net NPA of 0.43 per cent and a gross NPA of 1.86 per cent at the end of March 31,2011. In FY11, the total repayment of banks was Rs 988 crore. The company raised a bank loan of Rs 4305 crore in FY 11 as compared Rs 2500 crore in FY10.The issue's 80 per cent is reserved for retail investors who have the option to choose between three years and five years tenor options and will carry a coupon rate of up to 12.10 per cent per annum for those subscribing for the longer tenure. The qualified institutional buyers (QIB's) have been offered an interest rate of 11 per cent.