Shriram Finance, the merged entity of erstwhile Shriram Transport Finance Company and Shriram City Union Finance, is diversifying its offerings through a slew of new products in areas like supply chain funding and education loans.

It will roll out a supply chain funding product next month, followed by education loans by FY23-end or early FY24. These will be pilot runs for six months.

Y S Chakravarti, MD & CEO, Shriram Finance, told FE that the supply chain funding product would help the anchor, such as a manufacturer or large distributor, and his supply chain ecosystem containing a number of vendors.

Also Read: Interview| ‘SME business will drive growth’: YS Chakravarti, MD & CEO, Shriram Finance

“There will always be an anchor who will be an OEM or large distributor, and we will tie up with them to fund the entire ecosystem. We are starting the pilot and the software is being readied, as it is a high-churn business and the software needs to be robust. The tenure will be very short, about 90 to 180 days, and per anchor, we are deciding about `25 crore exposure,” he said.

The risk will not be on the anchor, but on the dealers in the ecosystem, he added. The company is not lending to the anchor, but to the dealers, so the ticket size will be somewhere between Rs 10 lakh and Rs 30 lakh. This portfolio will be around Rs 10,000 crore in four to five years’ time, he said.

Chakravarti said the company also wants to foray into education loans in the private sector, a segment currently catered to by only two companies. “It won’t be a high profile portfolio for us; probably in the next four to five years, it will be a `5,000-6,000 crore business. The idea is to offer nice products which will not be more than 10% of the company’s assets under management(AUM),” he said.

Also Read: Shriram Transport Rating: Hold | Moderate growth

The company is bullish about its gold loan portfolio and plans to expand the offerings across branches. “We would like to grow the gold loan portfolio to 10% of the AUM from the current 3% in four to five years,” he said. Asked about capital raising, he said the company is adequately funded for the next three years and has no need for fundraising.

Shriram Finance is a diversified player with a net worth of `37,500 crore and AUM of `1,71, 000 crore, catering to over 6.7 million customers. The company is aiming to grow AUM at 15% CAGR for the next three years, have gross non-performing assets at 6-7%, net NPA at 3-4% and net interest margin of 8-9%.

Umesh Revankar, executive vice chairman, Shriram Finance, said, “Our strategy so far has been focused onn the transportation industry, but going forward we are diversifying our product offering, which will be focused on self-employed and small enterprises. Within MSME, we will target the bottom of the pyramid, which suffers from high cost of credit and often lack timely access to capital.”