Truck demand sluggish; margins down 80bps: Shriram Trans

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Truck demand sluggish; margins down 80bps: Shriram Trans

Due to sluggish truck demand, Shriram Transport Finance saw margins falling 80 basis points to 7.39% in the third quarter of FY12.

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Due to sluggish truck demand, Shriram Transport Finance saw margins falling 80 basis points to 7.39% in the third quarter of FY12. "We also had a residual mining loss of Rs 20 crore which we wrote off this quarter," said managing director R Shridhar.

Net profit was flat for the quarter at Rs 300 crore, but disbursement was 4% less compared to last year. "However, it grew from Rs 4800 crore to Rs 4900 crore, so there is a marginal increase compared to last quarter," said Shridhar.

Below is an edited transcript of his interview with Sonia Shenoy. Also watch the accompanying video.

Q: Can you give me the NII figure and what you have done in terms of net interest margins this time?

A: The net interest margin is down by 80 basis points at 7.39% compared to 8.19%, which was there in the last quarter as well as in the quarter of previous year. The profit after tax is flat compared to last quarter, which was Rs 300 crore and earlier year also it was Rs 301 crore.

This is on account of drop in the net interest margin. The yield as well as the cost has gone up a little bit because truck demand is sluggish. We couldn't increase the interest rates and our disbursement was also 4% less compared to last year. Last year it was Rs 5,150 crore, this year it's Rs 4900 crore as against about Rs 4800 crore last quarter, so marginal increase in disbursement.

Q: Can you give me the core numbers for your asset quality this quarter and what do you expect is the way forward?

A: Last quarter we wrote off about Rs 70 crore on account of vehicles in mining, we had a residual mining loss of around Rs 20 crore that we have written off this quarter and I don't anticipate any further loss on account of mining.

Other than that, our delinquency has been stable. We have a 2.79% gross non-performing loans (NPLs) and 0.4% net NPLs, so the unprovided is only Rs 93 crore. On the whole, we have a good coverage of 86% on that. The assets under management are inching towards Rs 40,000 crore; we are already about Rs 39,300 crore at the end of this quarter.