Shriram Transport Finance plans to invest about Rs 500 crore in its nascent subsidiary, Shriram Equipment Finance, this year.
The fledging non-banking finance company (NBFC) finances construction equipment in the infrastructure sector.
The market for new construction equipment is estimated at about Rs 10,000 crore, and that for used equipment, another Rs 10,000 crore.
On the sidelines of the Shriram Transport Finance annual general meeting, Mr R. Sridhar, Managing Director, said, “We expect the construction equipment subsidiary to disburse about Rs 3,000 crore this year, for which a capital of Rs 500-600 crore would be required.”
Disbursals
Shriram Equipment Finance has disbursed about Rs 600 crore since October 2010, when it was established.
“As Shriram Transport Finance is a leader in financing used commercial vehicles, we plan to grow the equipment finance company to Rs 6,000 crore in the next two years,” he said.
Capital adequacy norm
With the RBI hiking the capital adequacy requirement to 15 per cent from 12 per cent, Shriram Equipment Finance would require a capital of Rs 1,000 crore in the next two years, he said.
Asked if Shriram Transport was looking for an equity partner, Mr Sridhar said “it is too early to talk about it.”