R. Sridhar of Shriram Truck Finance Corporation
By kamla bhatt • Mar 17th, 2007Category: Business & Tech, Chennai, Ideas, India, Mumbai, VC & Private Equity Funding
R.Sridhar heads one of the largest truck finance companies in India. Shriram Truck Finance Corporation (STFC) manages about $2 billion assets under its management.
Chances are that many of the trucks plying on Indian roads and highways are financed by STFC. STFC finances about 75% of the small truck owners in India. Most of these truck owners fall in the sub-prime category and banks often do not finance them. As Mr. Sridhar puts it they are the only company in India that finance pre-owned and new trucks in this sub-prime category.
STFC’s unique business model of financing trucks has had low rates of default. This is how it works. Every truck financed by STFC is a partnership of three parties as Mr. R. Sridhar puts it. The partnership is between the truck operator, the lending bank and STFC. But, how does a truck owner get financing in the first place when he/she has no credit card or collateral? Find out how the system works and why the default rate by truck owners is low. Their rate of recovery of loans is almost 100 percent he points out.
What kind of system does STFC have in place to collect its monthly installments from the truck owners? How does it operate its networks? How do they collect about millions of dollars every year?
The company was founded in 1979 and has grown organically with minimum of marketing and advertisement. They have 5,000 employee and about 500,000 customers around the country.
Technorati tags: Sheridan Transport Finance Corporation, R. Sridhar, Trucks, India Transportation, India
I just finished listening.
Interesting subject.
I wouldn’t have thought any one would venture to lend to the community of transport operators.
If they have made a success of it, I say Hats Off!
I would have liked to know how they handle defaulters.
Surely, there must be several of them?
Collecting dues from this trucking community can be a challenge.
I am unable to collect from my maidservant. As soon as she comes close to paying what she owes on the previous loan, she is ready with her demand for the next loan. The excuses are all ready and pat.
Ugadi and any other Habbba is good enough a reason.
Some years back, my wife fancied milk straight from the udders, instead of Nandini Haalu from Bangalore Dairy.
A cow would be brought to our door and milked right in our presence.
The sight of frothy milk unadulterated with water or milk powder was a welcome sight . My neighbour’s children would watch fascinated. They have only read in books that cows give milk. They have never seen a cow actually giving milk.
The honeymoon with this cowherd lasted a few weeks. That was till he asked for a loan to buy a companion cow.
After considerable nagging, we yielded in a moment of weakness.
Half the money is still due from this milkman and he has vanished with his cow and I can’t be bothered going to his native village to track him down. I understand his cow longer yields milk but continues to yield dung.
Collecting lakhs from this community of truck drivers is the real challenge in this business and I am left wondering how they do it.
You can bring pressure on the white collared educated middle class to cough up.
How do you handle this rough and tough community?
As a brand ambassador for this business, Dharmendra is a good choice.
I can’t think of any one better.
You mentioned Rajnikant.
If they wish to lend to Autodrivers, well, Rajnikant would perhaps fit the bill.
If they diversify and lend to milkmen, I suggest actor Govinda!
And yes, I would love to use their good offices to get back the money I lent to my milkman several years ago.
Thanks once again for an interesting podcast.
Back to work from tomorrow.
This has been a nice long weekend.
Happy Ugadi!
G Vishwanath
As always thanks for your really long, cogent comments.
Yes, it comes as a bit of a surprise that here is an untapped market that is worth billions.
If you listened closely he does mention that their defaulters are very low. That is because if the ripple effect of the defaulters. Each person is referred by a non-defaulter truck driver, who has been regular with his payments. Now, when this person recommends, he also co-signs the loan. That is the safety net that the finance company has built around the borrowers.
Thanks,
kamla