Commercial Vehicle Finance firm Shriram Transport Corporation Ltd (STFC) is planning to enter into insurance broking business and is currently waiting approval from the insurance regulator to start operations of the subsidiary.
The company has applied to the Insurance Regulatory and Development Authority a few months back (Irda) and the business is to cater to the needs of the existing customers, said a senior company executive hear.
Speaking to reporters here, Umesh Revankar, managing director & CEO, STFC, said that the company has applied for approval from the Irda for insurance broking firm, which would be the third subsidiary of the company. The new subsidiary would be to meet the requirements of the existing around nine lakh customers. However, the structure of the new company is yet to be decided, he added.
In a prospectus filed by the company with the Securities and Exchange Board of India (Sebi), dated July 5, 2013, to raise Rs 750 crore through public issue of Non-Convertible Debentures (NCDs) the company said, "Further, our Company has incorporated a wholly owned subsidiary by the name of Shriram Insurance Broking Company Limited (SIBCL), with an objective of entering into the insurance broking business and Shriram Insurance Broking Company Limited has applied to the Irda for registration as a direct broker on February 4, 2013 and is awaiting receipt of the same."
"It proposed to commence business of insurance broking upon receipt of the aforesaid registration from the Irda," added the company in its document.
The new subsidiary is part of STFC's efforts to expand its product portfolio and enter into certain new lines of businesses as part of growth strategy, it added. With this, the company has four subsidiaries, Shriram Equipment Finance Company Limited, Shriram Automall India Limited and SIBCL.
Speaking about the equipment finance company, Revankar said that the subsidiary currently has an Assets Under Management of Rs 331 crore and a net profit of Rs 89 crore in the fiscal year ended March 31, 2013. The company has been growing the equipment finance business for the past five years.
There are around 24 Automalls under Shriram Automall, another subsidiary developed as a one-stop shop catering to the various needs of commercial vehicle and equipment users, banks, NBFCs and other lenders who wish to dispose of repossessed assets, automobile and equipment dealers and manufacturers. The company is currently providing fee based services to facilitate the sale of pre-owned commercial vehicles and equipment.
As of March 31, 2013 the company has 539 branches across India, including at most of the major commercial vehicle hubs along various road transportation routes in India. It had also established presence in 350 rural centres by the end of last fiscal year.
