Shriram Transport Finance expects to sustain collection efficiency at 95%

For the six months we are targeting around Rs 24,000-25,000 crore of disbursements," Revankar said. In the quarter ended September, the asset financing NBFC's profit after tax declined 10.52 per cent to Rs 684.56 crore as against Rs 765.05 crore in the year-ago quarter.

Non-banking finance company Shriram Transport Finance, which saw its collection efficiency improving to 95 per cent in September, expects to maintain the level going ahead with economic activity picking up and improving rural demand. The company's collections declined to 23 per cent in April during the nationwide lockdown, but has seen improvement in the subsequent months.

In June, July and August, collections stood at 71 per cent, 73 per cent and 78 per cent, respectively. The company focuses on financing pre-owned trucks.

"In September, our collection efficiency was 95 per cent. We should be able to now sustain this collection (level) as the rural demand is quite good," the company's managing director and CEO Umesh Revankar told PTI. "When rural demand is good and consumption is good, then automatically the movement of goods will be higher. To that extent, I feel things are much better. All our customers are able to operate their vehicles, and so they are all earning and paying (back loans)," he added.

Apart from this, November-December is the time for harvest, and so transportation requirements will be much higher, which will again result in improvement in repayment capacity of the company's borrowers, he said. Pre-COVID, collection efficiency of the company was in the 92-95 per cent range.

During the first half of FY21, the company disbursed Rs 8,000 crore including Rs 6,463 crore in the second quarter. It is targeting to disburse around Rs 25,000 crore during the October-March period. "In the second half (of FY21), we should be able to do approximately Rs 4,000 crore per month. For the six months we are targeting around Rs 24,000-25,000 crore of disbursements," Revankar said.

In the quarter ended September, the asset financing NBFC's profit after tax declined 10.52 per cent to Rs 684.56 crore as against Rs 765.05 crore in the year-ago quarter. Revankar said the profit in Q2 FY20 was higher as the company got advantage of reduction in corporate tax to 25 per cent.

"In August last year, the finance minister had announced a reduction in corporate tax to 25 per cent. During the first quarter of FY20, we had paid excess tax, which got aggregated in the second quarter of FY20. And so, our second quarter (FY20) profit went up," he explained. During the July-September 2020 quarter, its net interest income declined 1.67 per cent to Rs 2,021.86 crore from Rs 2,056.11 crore in the same period of the previous year.

Gross NPA and Net NPA as of September 30, 2020 stood at 6.42 per cent and 3.64 per cent, respectively, as against 8.80 per cent and 6.15 per cent in the same period of the previous fiscal. Revankar expects one-time restructuring to be less than 3 per cent of the company's total loan book.