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2013-08-01

Shriram City Union Finance plans to raise Rs 1k cr

Non-banking finance company (NBFC) Shriram City Union Finance plans to raise around Rs 1,000 crore issuing debentures and through other debt this fiscal to achieve a growth of around 25-30 percent over the next couple of years, a top company official said on Wednesday.

Non-banking finance company (NBFC) Shriram City Union Finance plans to raise around Rs 1,000 crore issuing debentures and through other debt this fiscal to achieve a growth of around 25-30 percent over the next couple of years, a top company official said on Wednesday.

 

G.S. Sundararajan, Managing Director, Shriram City Union Finance told reporters in Chennai, “The fund raising is expected to happen sometime this year to support the company's target. The company will continue to grow its non-corporate book size in a focused manner.”

 

Going by the growth plans, the company would need around Rs 2,500 crore for the next 2 to 3 years.

 

Sundararajan said the company will be the growth driver of the Shriram Group in the coming years with a focused thrust on non-corporate or MSME sector.

 

He said 17 percent of the country's gross domestic product (GDP) is contributed by the MSME sector comprising of around 2.6 crore business units.

 

“The lending risks attributed to MSME sector is not as large as it is made out to be. The cost of finance for MSME is very high from the banking channels,” he said.

 

According to him, the government should first make the banks to lend to the non-corporate sectors and then look at tightening the norms for NBFCs than the other way around.

 

“If the latter happens then the non-corporate sector will lose the one main source of finance,” he added.

 

For Shriram City Union, the non-corporate sector loan constitutes around 46 percent and the company wants to grow it to 60 percent.

 

According to Subhasri Sriram, Executive Director and Chief Finance Officer, getting a credit rating in a way acts against the interests of MSMEs.

 

“The rating agencies largely depend on data on paper which the MSMEs do not maintain. The net result is that the rating agency would give a lower credit rating. The banks in turn would charge a higher rate,” said Sriram.

 

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