Shriram Transport Finance Company is planning to infuse around INR 1,000 crore in its subsidiary Shriram Equipment Finance Company.

The proposed infusion is to support SEFC’s diversification into the infrastructure space, which is currently dominated by Tata Capital and L&T Finance among others.

Speaking on the sidelines of the annual general meeting, Mr R Sridhar managing director of STFC said that “We will not finance infrastructure projects, but construction equipment for these projects including cranes, crushers, mixers and road rollers.”

The company would lend to medium and small contractors, who are facing supply and demand mis-match when it comes to funding.

STFC is a non banking financial company of the INR 30,000 crore Shriram Group.

According to Mr Sridhar, the industry is estimated to be around INR 20,000 crore including new vehicle and used vehicle.

Mr Arun Duggal chairman told shareholders “The construction equipment finance segment provides significant growth opportunity and, therefore, we have decided to increasingly focus on construction equipment finance as a distinct business segment.”

Mr Sridhar said the company had set a target of INR 5,000 crore disbursement by 2013, for which the capital adequacy ratio requirement was around INR 1,000 crore, which will be infused by Shriram Transport Finance.

So far STFC has infused around INR 150 crore and will infuse INR 500 crore to INR 600 crore during the current fiscal to reach the target of INR 3,000 crore disbursement for the current fiscal.

(Sourced from BS)