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MOTORINDIA
l
September 2012
107
lion in 2010. The growth potential is
expected to drive demand for con-
struction equipment such as crawl-
ers, excavators, loaders and compac-
tion equipment, and boost the heavy
equipment rental and leasing busi-
ness, which is a highly fragmented
industry dominated by unorganised
small construction equipment op-
erators. There was a growing trend
among small road transport opera-
tors to diversify into construction
equipment, owing to impending in-
frastructure investments in India.
To capitalize on the opportunity
and continue nurturing its exist-
ing relationships, STFC floated a
subsidiary - Shriram Equipment
Finance Company Ltd., in 2010,
comprising of an independent team
of professionals, having intensive
product expertise. Through Shriram
Equipment Finance, it offers a wide
range of pre-owned and new com-
mercial construction equipment in-
cluding forklifts, cranes and loaders.
During 2011-12, Shriram Equip-
ment Finance Company Ltd. regis-
tered a topline of Rs. 210.11 crore
and a net profi t of Rs. 51.62 crore.
Shriram Automall India Ltd.
During its second year of opera-
tions, Shriram Automall India Ltd.,
operates eight Automalls. Automall
is the first-of-its-kind mall that of-
fers a common meeting platform
for the potential buyers and sellers
where the valuation of the vehicle
is determined through a transpar-
ent public auction process. Till date,
more than 1,200 auctions have been
conducted and more than 45,000 ve-
hicles have changed hands with over
35,000 bidders. The value proposi-
tion of each Automall is absolute
transparency in valuation process,
backed with assured title, quality
and performance of the vehicle.
Shriram New Look is a novel
initiative taken by STFC that aims
at empowering vehicle owners to
transact refurbished vehicles by ad-
dressing and correcting few mainte-
nance issues. This facility is availa-
ble in the Automalls and is managed
by a dedicated team.
Brighter prospects
The industry is expected to per-
form better than the last year as lead-
ing indicators suggest turn around in
IIP growth. The overall domestic
growth outlook for the current year
looks a little better than last year.
According to RBI’s baseline projec-
tions, the GDP growth for the cur-
rent year 2012-13 should be 7.3 per
cent. The global outlook also looks
slightly better than expected earlier.
Domestic passenger MHCV sales
volume growth is likely to witness
flat growth in FY13 due to the expi-
ration of the Jawaharlal Nehru Na-
tional Urban Renewal Mission (JN-
NURM) scheme in December 2011.
Under this scheme, state transport
undertakings received funding for
purchase of buses. The JNNURM
scheme had contributed 7 per cent
of average annual sales volumes
for passenger MHCVs over FY07-
FY11.
Meanwhile,
domestic
cargo
MHCV sales volume growth is
likely to moderate to 7 per cent in
FY12 on account of moderation in
IIP growth. The correlation between
growth in IIP and road freight was
as high as 75 per cent over FY07-
FY11. An encouraging sign though
is the RBI decision to cut lending
rates by 0.5 per cent which is ex-
pected to revive overall business
activity in the country, hopefully
leading to increased movement of
freight and higher demand for com-
mercial vehicles, both new and old.
w
vehicle finance
The pre-owned commercial vehicle segment, which is STFC’s primary focus
area, is largely driven by aspirations of a unique customer segment –
either first-time users or driver-turned-owners. This, aided by the lower
deal size, results in a potent combination that has largely eluded eco-
nomic downturns. The company is the market leader in lending to this
segment and therefore remains least affected by economic downturns.