Shriram Transport Finance Co Ltd (NSE: SRTRANSFIN) was incorporated in the year 1979 and is registered as a Deposit taking NBFC with Reserve Bank of India under section 45IA of the Reserve Bank of India Act, 1934.1

Shriram Transport Finance Co Ltd (STFC) decided to finance the much neglected Small Truck Owner. Shriram understood the power of ‘Aspiration’ much before marketing based on ‘Aspiration’ became fashionable. Shriram started lending to the Small Truck Owner to buy new trucks. But we found a mismatch between the Aspiration and Ability. The Truck Operator was honest but the Equity at his command was not sufficient to support the credit levels required to buy a new truck.

YearKey Milestones
1979STFC was established
1984Initial Public Offering
1990Investment from Telco & Ashok Leylond
1999Tied up with Citicorp for CV financing under Portfolio Management Services (PMS)
2005-06Merger of Shriram Investment Ltd. and Shriram Overseas Finance Ltd. with STFC; PAT crosses Rs. 1,000 mn (2006)
2011Introduced Shriram Automalls – a dedicated platform for trading of preowned trucks at a fair value
2015-16Merger of Shriram Equipment Finance Co. Ltd with STFC



Commercial Vehicle Loan

  • Commercial Goods Vehicle Finance
  • Passenger Vehicle Finance
  • Tractor & Farm Equipment Finance
  • Construction Equipment Finance

Business Loans


  • Fixed Deposit
  • Recurring Deposit
  • Services

Working Capital Loans

  • Vehicle Insurance Loans
  • Tyre Finance
  • Tax Finance
  • Tool Finance
  • Repair/Top-up- Loans
  • Fuel Finance
  • Challan Discounting

Life Insurance

Emergency Credit Line Guarantee Scheme (ECLGS)


Industry Overview

India’s financial services sector comprises of commercial banks/co-operative banks, non-banking financial companies, insurance companies, pension / mutual funds and other various entities. India is expected to be fourth largest private wealth market globally by 2028.2

NBFC Sector

NBFC sector plays important role in financial inclusion by meeting credit needs of retail and MSME sector. The AFCs, LCs and ICs were merged into new category called ‘Investment and Credit Company (NBFC-ICC). As per RBI regulations, NBFCs with minimum Net Owned Funds of Rs. 200 lakhs are allowed to operate. This resulted into reduction in number of NBFCs from 9,856 at the end of March,2019 to 9,642 NBFCs at the end of September,2019. There are 69 deposit accepting NBFC.

Although the NBFC sector grew in size from Rs. 26.2 lakh crore in 2017-18 to Rs. 30.9 lakh crore in 2018-19, the pace of expansion was lower than in 2017-18 mainly due to rating downgrades and liquidity stress in a few large NBFCs in the aftermath of the a large NBFC committing default interest payment and loan repayment obligation to banks and security holders. This slowdown was witnessed mainly in the NBFCsND-SI category, whereas, NBFCs- D broadly maintained their pace of growth. However, in 2019-20 (up to September) growth in balance-sheet size of NBFCs-ND-SI as well as NBFCs-D moderated due to a sharp deceleration in credit growth.

Over 40 per cent of the retail portfolio of NBFCs are vehicle and auto loans. The slowdown in auto loans in 2018-19 could be attributed to a slump in aggregate demand, exacerbated by postponement of vehicle purchases in anticipation of the implementation of BS-VI norms, the sharp increase in insurance costs in case of passenger vehicles and two wheelers, and sizeable enhancement in permissible axle load for commercial vehicles. In the consumer durables segment, a decline in credit extended was observed, reflecting muted consumer demand

Commercial and Passenger Vehicle Industry

The automobile industry produced a total 1,447,345 vehicles including Passenger Vehicles, Commercial Vehicles, Three Wheelers, Two Wheelers and Quadricycle in March 2020, as against 2,180,203 in March 2019 with a degrowth of delete 33.61%. The Passenger Vehicles sales was 143,014 units in March 2020, compared to 291,861 units in March 2019 marking a decrease by delete 51%. The Commercial Vehicles sales was 13,027 units in March 2020 compared to 109,022 units in March 2019 marking a decrease by delete88.05%. The Three-wheeler sales was 27,608 units in March 2020 compared to 66,274 units in March 2019 marking a decrease by delete 58.34%. The Two-wheeler sales was 866,849 units in March 2020, compared to 1,440,593 units in March 2019 marking a decrease by delete 39.83%

The industry produced a total 26,362,284 vehicles including Passenger Vehicles, Commercial Vehicles, Three Wheelers, Two Wheelers and Quadricycle in April-March 2020 as against 30,914,874 in April-March 2019 with a decline of delete14.73%.

The Passenger Vehicles sales was 2,775,679 units in AprilMarch 2020, compared to 3,377,389 units in April-March 2019, down by delete17.82%. The Commercial Vehicles sales was 717,688 units in April-March 2020 compared to 1,007,311 units in April- March 2019, down by delete 28.75%. The Three-wheeler sales was 636,569 units in April-March 2020 compared to 701,005 units in April-March 2019, down by delete 9.19%. The Two-wheeler sales was 17,417,616 units in April-March 2020, compared to 21,179,847 units in AprilMarch 2019, down by delete 17.76%.

Financial Highlights

For the financial year ended March 31, 2020, the company earned Profit Before Tax of Rs.3,438.67 crores as against Rs.3,778.27 crores in the previous financial year and the Profit After Tax of Rs.2,501.84 crores as against Rs.2,563.99 crores in the previous financial year. The total income for the year under consideration was Rs.16,582.63 crores and total expenditure was Rs.13,143.96 crores.

The total Assets Under Management had increased to Rs.109,749.24 crores from Rs.104,482.29 crores. During 2019-20, the Company securitized its assets worth Rs. 16,581.13 crores (accounting for 15.11 % of the total assets under management as on March 31, 2020) as against Rs. 15,123.06 crores during 2018-19. With securitisation, the Company ensures better borrowing profile, leading to lower interest liability owing to its lending to priority sector as per RBI. The outstanding direct assigned portfolio stood at Rs. 1,247.53 crores as on March 31, 2020.

The Company continued its focus on financing of pre-owned commercial vehicles. The relationship based business model enabled us to maintain the leadership position in the preowned commercial vehicles financing segment. For further market penetration, the Company opened 213 new Branches and other offices. With this the total number of Branch and other offices across India has now increased to 1,758.

The Company’s total Capital Adequacy Ratio (CAR), as of March 31, 2020, stood at 21.99% of the aggregate risk weighted assets on balance sheet and risk adjusted value of the off-balance sheet items, which is above the regulatory minimum of 15%.


Recent developments

Shriram Transport Q3 results: Profit falls 17% on additional pandemic provision 3

Jan 28, 2021; Shriram Transport Finance Company reported 17 per cent decline in net profit at Rs 727.72 crore for December quarter 2020-21 as it made additional provisions related to the COVID-19 pandemic.

The key net interest income rose to Rs 2,148.22 crore from Rs 2,113.75 crore in the same period of the previous year.

The company made an additional expected credit loss provision of Rs 224.82 crore in the quarter, taking its overall pandemic provisions to Rs 1,597.62 crore in April-December period of the fiscal and the total additional pandemic provision at Rs 2,507.26 crore.

Gross NPA and net NPA as of December 2020 stood at 5.33 per cent and 3.22 per cent, respectively, as against 8.71 per cent and 6.09 per cent by the same period a year ago.

However, such accounts have been classified as stage 3 and provisioned accordingly. Had the company classified these borrower accounts as NPA after August 2020, the gross NPA and net NPA ratio would have been 7.11 per cent and 4.31 per cent, respectively, it said.

Total assets under management of the largest asset financing NBFC in the country stood at Rs 1,14,932.06 crore compared to Rs 1,08,931.38 crore by December 2019.

Shriram Transport Fin may look at raising $250 mn via social bonds in Q4 4

Jan 31, 2021; After raising $500 million through social bond issue earlier this month, non-banking financial company

Shriram Transport Finance Company may look at raising another $250 million from such bonds before March, a top company official said.

As part of its $3 billion global medium term note programme, the deposit taking NBFC had raised $500 million at a coupon rate of 4.4 per cent.

As per the Reserve Bank of India (RBI) guidelines, eligible borrowers can raise external commercial borrowing (ECB) up to $750 million per financial year under the automatic route.

"It depends on international markets (conditions). We need to look for a very good window (to raise $250 million from social bonds). If there is a window available, we may raise it before March (2021)," the company's managing director and CEO Umesh Revankar said.

In the quarter ended December 31, the company's deposits grew by around 19 per cent (y-o-y) to Rs 14,335.36 crore from Rs 12,027.72 crore last year. On a sequential basis, the increase was close to 11 per cent.

Revankar said the company was earlier using corporate channels to mobilise deposits but has now started accepting deposits across all its branches, and that has resulted in good inflows.

"We feel a similar momentum to continue because right now deposit rates of banks are lower and so depositors are looking for better avenues. Also, inflows into mutual funds have reduced and it is getting shifted to banks, and a good part of it to non-banks. There is a big shift in our resource raising," he said.

The NBFC offers an average interest rate of around 8 per cent on deposits.

Revankar said the company expects to mobilise deposits of around Rs 2,000 crore in the current quarter.

In the third quarter of the current financial year, the company's profit after tax dipped 17 per cent to Rs 727.72 crore as against Rs 879.16 crore in the same period of the previous year.

Revankar attributed the drop in profit to lower net interest margins (NIM) and also on higher provisions of around Rs 220 crore related to COVID.

NIM stood at 6.88 per cent compared to 7.34 per cent.

As of December 31, 2020, additional expected credit loss (ECL) provision on loans assets on account of COVID - 19 stood at Rs 2,507.26 crore.

During the quarter, gross NPA improved to 5.33 per cent from 8.71 per cent. Net NPA eased to 3.22 per cent from 6.09 per cent.


  1. ^ https://www.stfc.in/about-us/
  2. ^ https://cdn.stfc.in/common/STFC_AR_2019-20.pdf
  3. ^ https://economictimes.indiatimes.com/markets/stocks/earnings/shriram-transport-q3-results-profit-falls-17-on-additional-pandemic-provision/articleshow/80514503.cms
  4. ^ https://economictimes.indiatimes.com/markets/bonds/shriram-transport-fin-may-look-at-raising-250-mn-via-social-bonds-in-q4/articleshow/80613179.cms
Created by Asif Farooqui on 2021/02/01 18:49
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