Umesh Revankar, CEO & MD, Shriram Transport Finance Co. Ltd. speaks about fourth-quarter results, liquidity situations of the NBFC sector and current cost fund of the company during an interview with Swati Khandelwal, Zee Business. Excerpts: 

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Q: Provide important highlights of the fourth quarter of fiscal 2018-19? Also, talk about the loan growth and segment-wise performance of the company? 
A: The disbursement in the fourth quarter has increased by 25 per cent if seen with a Quarter on quarter (QoQ) perspective. Assets under management (AUM) for the full year has increased by 8.54% and stands at 1 lakh 4482 crores against 96,260 crores. When it comes to loan growth than the rural market was the biggest contributor and I think it, the rural market, will be the maximum contributor in future as well. 

Q: Good improvement has been seen on the asset quality front of the company. How did it happen and how much recovery is expected this year?
A: There is an improvement in asset quality. If you have a look, then Gross Stage 3 of the newly adopted Indian Accounting Standards (Ind AS) then our stage 3 stands at 8.37 against 9.39, which means there is a 100bps improvement. Overall, market conditions are good for the trucks especially excel weight can take it more ahead. 

Q: Update us on the ongoing liquidity situation of the NBFC sector and provide a time by when the sector will come out of it?
A: When it comes to funds then in April 2019, we raised US bonds of $500 million. Thus, funds are available in our company. We have retail NCD plans and retail NCD funds will be raised by June 2019. So, challenges related to funds is not visible. 

 Q: How is the situation in the cost of funding right now?
A: Current cost of fund is anywhere between 9.3 to 9.4 and that is an average of the retail and wholesale. 

Q: Do you think that the ongoing slowdown in the auto sector, which has raised the inventory levels, will have any impact on your business?
A: If you have a look at the sales of the new vehicles than you will find that there was a decline in sales of new vehicles for the last six months. In addition, there is a slowdown in the real estate and infrastructure sector. Probably, people are also postponing their purchasing plans due to elections. I feel demand in sales and government infrastructure will go up as soon as the election results are announced. Secondly, the demand will also pick up due to good monsoon as predicted by IMD and Skymet. That is why I feel that demand will pick up and be back to normal by August-September. 

Q: What is your strategy to cater to the used vehicle segment?
A: Our total branch network stands at 2545. And, the business expansion will depend on the rural reach that will be created as reach plays an important role in the used-vehicle segment, which helps in bringing new business. Customer-to-customer connect is important for collection and recoveries in the rural and semi-urban area. I think that our reach is quite good in the segment. In addition to the branches, we also have 838 rural centres and it will help us in improving our penetration in the used-vehicle segment.