Shriram Finance will focus on expanding its micro, and small enterprises segment across India’s northern, central and eastern states, its executive vice chairman Umesh Revankar said.
“We will be focusing on our mainstay business like commercial vehicle and two-wheeler (finance). Additionally, we would like to expand the micro and small enterprises business across northern, eastern and central states in India because we feel there is a huge opportunity to increase our lending. Currently, we are largely present in the southern and western states,” Revankar said.
“Our strength comes from our reach; many of our customers are self-employed and have their own enterprise. We have not been extending our credit to them. It is now an opportunity to extend our credit. We may not get into a new segment and a new market altogether. We would like to extend the existing customer base and ecosystem.”
Currently, 80% of Shriram Finance’s branches are located in southern and western states, and the remaining 20% is located in the north and east.
In the next three years, the company expects its micro, small and medium enterprises (MSME) portfolio to constitute 15% of the overall loan book from the current 11%.
The company on Tuesday reported its December quarter results, wherein consolidated net profit tripled year-on-year (y-o-y) to nearly `1,802 crore due to growth in assets under management (AUM).
“We should be able to grow our AUM at a compound annual growth rate of 15% over the next three years. Today, our AUM growth rate is around 13.2% so we are almost near the target,” he said.
The company has seen an improvement in the gross stage 3 assets and net stage 3 assets in the December quarter. “We cannot say that we will significantly improve our non-performing asset ratio going ahead, as most of our customers are businessmen, truck operators and self-employed persons. But we are sacrosanct on our credit cost,” he said. The company aims to keep its credit cost around 2% in the long term.