Shriram Transport Finance Co, an Indian truck financier backed by Fidelity Investments, may borrow as much as Rs 3,000 crores ($663 million) to expand lending, according to Managing Director R. Sridhar.
The Mumbai-based firm plans to increase its equipment financing business and boost assets under management to Rs 5,000 crore by the end of March 2013 from about Rs 300 crore as India increases spending on roads and ports to sustain the fastest pace of economic growth after China, he said.
“The country is going to spend a lot of money on infrastructure to sustain the growth target and we will target infrastructure equipment financing,” Sridhar said in a March 11 telephone interview.
The shares fell 0.5 per cent to Rs 775.9 at the 3:30 pm close in Mumbai on March 11. They soared 54 per cent in the previous 12 months to March 11, exceeding the 5.9 per cent advance of the Bombay Stock Exchange’s BSE100 Index.
Shriram Transport, which finances more than 1,200 vehicle purchases daily, in November said it will apply for a banking license to extend its lending facilities. The lender has forecast a 25 per cent increase in profit in the year ending this month as faster economic growth bolsters demand.
Sridhar, who said the company has no immediate need to raise funds, declined to elaborate on how or when the debt may be raised.
Vehicle financing assets under management may expand by 20 per cent this year to about Rs 35,000 crores, and increase by another 20 per cent in the following year, Sridhar said. The net interest margin will be about seven per cent in the year ending this month, a rate it expects to maintain in the following 12 months, he said.
Shriram Transport had cash and equivalents of about Rs 4,830 crore as of September 30, when total debt was Rs 20,300 crore, according to data compiled by Bloomberg.