Stfc deluxe ar 12 13

Punjab Sindh Gujarat Maratha Dravid Utkal Banga Vindhya Himachal Yamuna Ganga…

SHRIRAM TRANSPORT FINANCE COMPANY LIMITED ANNUAL REPORT 2012-13

Forward looking statements In this Annual Report, we have disclosed forward looking information to enable investors to comprehend our prospects and take informed investment decisions. This report and other statements – written and oral – that we periodically make, contain forward looking statements that set out anticipated results based on the management’s plans and assumptions.

We have tried wherever possible to identify such statements by using words such as ‘anticipate’, ‘estimate’, ‘expects’, ‘projects’, ‘intends’, ‘plans’, ‘believes’, and words of similar substance in connection with any discussion of future performance.

We cannot guarantee that these forward looking statements will be realised, although we believe we have been prudent in assumptions. The achievement of results is subject to risks, uncertainties and even inaccurate assumptions. Should known or unknown risks or uncertainties materialise or should underlying assumptions prove inaccurate, actual results could vary materially from those anticipated, estimated or projected. Readers should bear this in mind.

We undertake no obligation to publicly update any forward looking statements, whether as a result of new information, future events or otherwise.

Contents Jana Gana Mana

2

About us

4

Performance in numbers

6

Annual performance trends

7

The road till now

8

Chairman’s overview

10

Managing Director’s review

12

Corporate Social Responsibility @ Shriram

26

Awards and Accolades

29

Our Reach

30

Board of Directors’ profiles

32

Inclusion and accessibility are basic pillars of everyday democracy.

- Michael Briguglio

Annual Report 2012-13

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Performa

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The road till now

Chairman’s overview

Jana Gana Mana

It is not surprising to note that India being the world’s latest democracy with second largest population - is also perhaps the only country in the world whose national anthem also begins with the word - people.

The idea of this nation was deep rooted within prosperity, freedom and happiness of a common man. The architects of this nation dreamt of a sovereign, socialist, secular, democratic republic offering equal fundamental rights to each and every citizen. Even after 65 years since independence, ‘the people factor’ continues to be the most inspiring paradox till date. On the one hand, the burgeoning population has been a consistent bane in achieving accelerated growth; fueling disparity in terms of standards of living, incomes and opportunities. On the other hand, the demographic advantage emanating from it (largest working age population in the world by 2030) have put India on the global map in terms of rising consumption and increased workforce.

Modern India is young, ambitious and therefore among the fastest growing economies in the world. The country is headed to become the epicenter of working age population in the world by 2030, which if well utilised could place India among the top three largest economies (by size) by 2050. While the economic ecosystem remains hostile and tough, owing to global as well as regional challenges; India growth story remains intact, despite its tips and troughs. The genesis lies in huge geographical as well as socioeconomic diversity in the country. With the urban centres feeling the heat in terms of withering economic activity; the traditionally backward states comprising of rural and semi-urban centres are leading the great Indian consumption story. This is primarily owing to two factors: ſrst, the improved employment initiatives by the government and second, rising land prices.

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Managing Director’s review

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Board of Dire ctors’ pr ofiles

This newfound prosperity has had a dual-impact. People with resources are consuming more and people with limited resources are aspiring and striving for more, thereby offering a robust foundation for the inwardout economic growth.

At Shriram Transport Finance Company, we have scripted a journey, in sync with evolving India. Today, having established our presence in the key markets across India, we are at the epicenter of the rapidly unfolding Indian growth story. Our deep-rooted association with the cause of empowering personal aspirations through entrepreneurship, since 1979 has enabled us to instill ſnancial inclusion among millions of drivers turned owners and ſrst time users by providing them timely access to affordable ſnance. In the process, we have not only helped them evolve from “unbankable” to “preferred customers” for large banks and ſnancial institutions; but more importantly have created an ecosystem that champions equal rights and celebrates the spirit of driving the change, one envisions. In the process, we also established a scalable and reliable relationship-based model, carefully woven around a unique asset class – pre-owned commercial vehicles. Today, with a consolidated assets under management of RS. 50,000+ CRORE, 16000+ EMPLOYEES and 950,0000+ CUSTOMERS, we are expanding prudently – by simply giving the power to the people to shape their own destiny. In other words, we continued to grow by silently and diligently practicing an omnipotent idea – the idea of India.

Annual Report 2012-13

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About us

Performa

nce in num b

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The road till now

About us Shriram Transport Finance Company Limited (STFC) is the ƀagship Company of Shriram Group – a diversiſed group with interests in ſnancial services, manufacturing, value added services, project development, engineering services, pharmaceuticals, etc.

Established in 1979, STFC has evolvedNon Banking Asset Financing Company having ~25 per cent market share in pre-owned and ~6 per cent share in new commercial vehicle ſnancing.

Headquartered in Mumbai, STFC has played a credible role in ſnancial inclusion of millions of ſrst time users (FTUs) and driver-turned-owner (DTO) by offering affordable ſnance on preowned commercial vehicles (CVs).

A professionally managed Company, presently led by Mr. Umesh Revankar, Managing Director; STFC has fostered the culture of entrepreneurship across all levels in the organisation.

Presently, the Company is driven by 16,000+ motivated employees (including ~10,100 product/ credit executives) championing a unique “relationship-based” business model through a panIndia network comprising 539 branches, 350 rural centres and partnerships with ~500 private ſnanciers.

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Chairman’s overview

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Managing Director’s review

Shri sibility @ cial Respon Corporate So

Our Reach

Board of Dire ctors’ pr ofiles

STFC, being a pioneer in pre-owned CV segment, has institutionalised its expertise in loan origination, valuation and collection. Over the years, STFC has created “an ecosystem of empowerment” by expanding its products and services to encompass similar asset classes (pre-owned and new commercial and passenger vehicles, tractors, 3 wheelers, multi-utility vehicles, etc.) and ancillary services (Finance for working capital, engine replacement, bill discounting, credit cards and tyre-loans as holistic ſnancing support).

STFC has two subsidiaries - Shriram Equipment Finance Company Limited (SEFCL) and Shriram Automall India Limited (SAIL). While SEFCL offers affordable ſnancing of preowned and new construction equipment; SAIL owns, operates and manages Automall, India’s ſrst physical platform for facilitating sale and purchase of pre-owned commercial vehicles.

It presently operates 21 Automalls across India. Besides, STFC has also introduced sale of refurbished commercial vehicles.

STFC is listed on the Bombay Stock Exchange (stock code: 511218) and the National Stock Exchange (stock code: SRTRANSFIN). Its market capitalisation as on 31st March 2013 stood at Rs. 15770 cr.+.

Annual Report 2012-13

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About us

Performa

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The road till now

Chairman’s overview

Performance in numbers CONSOLIDATED BASIS

Assets under management crossed

Rs.50,000 crore-mark

Total income up by Net proÄt 13.5 % to up by Rs.7,015.96 11.8 % to crore Rs.1,463 crore

Net interest income up by 9.5% to

Rs.3,657.84 crore

Securitisation for the year 2012-13 crossed

Rs.8,500 crore

11.5% to Rs.64.52

Total income up by

11.4 % to Rs.6,563.59 crore

Net proÄt up by

8.2 % to Rs.1,360.62 crore

Net interest income up by 7.2% to

Rs.3,458.82 crore

STANDALONE BASIS

6

Earnings per share up by

Shriram Transport Finance Company Limited

Earnings per share up by

7.9% to Rs.59.98

Our Reach

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Shri sibility @ cial Respon Corporate So

Managing Director’s review

Board of Dire ctors’ pr ofiles

Annual performance trends STANDALONE BASIS TOTAL INCOME (Rs. crore)

ASSETS UNDER MANAGEMENT (Rs. crore)

18,232.18

11,180.03

16,317.02

18,226.14

4000

2010-11

2011-12

2012-13

2008-09

2009-10

6,563.59

5,893.88

2010-11

2011-12

2012-13

1,360.62

1500

1,257.45

3,458.82

3,226.14

2,907.86

NET PROFIT (Rs. crore)

2010-11

2011-12

1200

2,217.55

900 612.40

1,727.75

2000

0

OFF BOOKS

NET INTEREST INCOME (Rs. crore)

2500

2000

1,229.88

ON BOOKS

3000

3000

1000

2009-10

3500

3,729.97

5000

5,401.05

6000

4,495.54

49,676.01

40,213.90

21,987.76

19,865.61

29,159.28

2008-09

7000

873.12

0

5,357.14

10000

17,979.25

17,964.09

20000

23,321.22

30000

36,182.63

40000

8000

31,443.83

50000

600

1500 1000

300

500 0 2009-10

2010-11

2011-12

2012-13

2012-13

3.1

2.5 2.1

41.09

3.2

3.5 3.0

50

2.0 30.11

1.5

0.8 0.4

0.7

0.5

10

0.4

1.0

20

0.8

30

2009-10

2.6

59.98

54.49

60

40

2008-09

NPA (%) 55.59

EPS (Basic) (Rs.)

0

2.8

2008-09

0.0 0

2008-09 2008-09

2009-10

2010-11

2011-12

2012-13

2009-10

2010-11

GROSS NPA

Annual Report 2012-13

2011-12

2012-13

NET NPA

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About us

Performa

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The road till now

Chairman’s overview

The road till now

19 84

Initial Public Offering

19 79

STFC was established

19 90

Investment from Telco & Ashok Leyland

Preferential Allotment to Citicorp Finance (India) in 2002

Tied up with Citicorp for CV ďŹ nancing under portfolio Management Services

Preferential Allotment to Axis Bank and Reliance Capital in 2004

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Shriram Transport Finance Company Limited

20 02 -0

19

99

4

The 1st securitisation transaction by STFC

ram

Purchased hypothecation loan outstanding of commercial vehicle and construction equipment of GE Capital Services India and GE Capital Financial Services (GE) aggregating to approximately Rs. 1,100 crore

PAT croses Rs. 100 crore (2006)

20 0

9

Investment from ChrysCapital (2005) and TPG (2006)

Securitised Rs. 8,757 crore during FY 2010.

0

Successfully raised Rs. 584 crore through QIP with domestic & international investors.

20 1 Floated two new subsidiaries: Shriram Automall India Limited and Shriram Equipment Finance Company Limited

1

3

Total Assets under Management crossed Rs. 50,000 crore as on March 31, 2013 on a consolidated basis

20 1

06

Board of Dire ctors’ pr ofiles

Successfully placed Rs. 1,000 of NCD with domestic investors

Merger of Shriram Investment Ltd. and Shriram Overseas Finance Ltd. with STFC

20 05 -

Our Reach

20 1

Managing Director’s review

Shri sibility @ cial Respon Corporate So

Annual Report 2012-13

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Chairman’s overview

Mr. Arun Duggal Chairman

Chairman’s overview

Despite the troughs, India has managed to remain the third fastest growing economy in the world. This epitomizes two major traits of our country, or moreover its people.

First being a deep-rooted entrepreneurial culture despite capital constraints; evidently demonstrated with the rise of the country as a service sector economy. And second, a

AFTER CLOCKING IN AN AVERAGE GDP GROWTH RATE OF

disparity in terms of wealth and income, which is expected

8.5+ PER CENT IN YEARS 2006-11, THE INDIAN ECONOMY

to get narrower with time; considering demographic

HAS LITERALLY CRAWLED IN THE PAST TWO YEARS.

advantage, rising aspirations, growing incomes and lower

IN 2012-13, INDIA IS EXPECTED TO HAVE RECORDED

savings rates. It is estimated that 70 per cent of Indians live

ITS LOWEST GDP GROWTH RATE IN THE PAST DECADE.

in rural areas. To reach the elusive milestone of 8 per cent

WHILE THE GLOBAL FINANCIAL TURMOIL CIRCA 2008

GDP growth, India has to invest in its rural and semi-urban

HAS PLAYED A KEY ROLE IN THIS SLOWDOWN, MANY

towns and villages. The impact of government’s initiatives

WOULD ARGUE THAT LACK OF CAPITAL CREATION IN THE

related to job creation and infrastructure development is

PAST FOUR YEARS, POLICY INDECISIONS AND GALLOPING INFLATION HAVE ALSO CONTRIBUTED IMMENSELY TO THE WITHERING GROWTH.

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visible. However, a lot needs to be achieved and hence the opportunity in the rural and semi-urban India remains as attractive as one can imagine.

Our Reach

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Managing Director’s review

Shri sibility @ cial Respon Corporate So

To reach the elusive milestone of 8 per cent GDP growth, India has to invest in its rural and semi-urban towns and villages.

Board of Dire ctors’ pr ofiles

and economical way to realize their entrepreneurial dream; but has empowered us to introduce a valuation code in an otherwise unorganised asset category. The response that we have received from our investors is humbling and heartening – reinstating our conſdence in our vision and strategy. In the process, today we have created a holistic and fool-proof ecosystem for ſnancial inclusion and empowerment for aspiring entrepreneurs.

At Shriram Transport, we have woven our growth strategy

In pursuing our vision, we have not lost sight of the

around this impending opportunity. Being a ſnancier

impending challenges. In fact, we believe that the roof

to ſrst time users and drivers-turned-owners, we have

should be repaired while the sun shines. Therefore, in

silently empowered over a million entrepreneurs since

2012-13, we also focused on strengthening the basic

inception. Our relationship-based model coupled with in-

pillars of our business model. We consolidated our

depth knowledge of a niche yet relevant asset class (pre-

presence to key towns and geographies, thereby ensuring

owned commercial vehicles) enabled our customers to

economical and proſtable operations. We focused on

pursue their entrepreneurial dream with lower investments,

greater training and development of our employees. We

customised documentation and no-frills servicing. Our

also strengthened our funds availability by issuing long-

business model therefore made us a tailored ſt for aspiring

term debt instruments, thereby paving way for faster and

entrepreneurs in a country having sub-25 per cent banking

responsible growth during the impending upturn in the

penetration.

Indian economy. However, in doing so, we also continued

In the past three years, we have expanded our branch

to deliver credible performance. During 2012-13, on a

network to 500+ locations across the country. With a

consolidated basis, our net interest income increased by

credible relationship-based model, we have continued

9.52 per cent to Rs. 3,657.84 crore and our net proſts

to retain our customers and evolve with them towards

registered an 11.8 per cent growth to Rs. 1,463.43 crore.

greater value creation. Besides our own branch network,

While our Assets under management crossed Rs. 50,000

we took the symbiotic route by partnering with 500+

crore mark, we continued to resort to higher provisioning

private ſnanciers across India - by offering them funds at

to protect our asset quality.

competitive rates, while mitigating asset quality risks. We

India continues to be the third fastest growing economy

expanded our focus from pre-owned commercial vehicles

in the world, despite its constraints. In the next few years,

to newer commercial vehicles – especially in the light

the destiny of the nation will depend on how effectively

commercial vehicles segment. Within pre-owned vehicles,

it manages diverse challenges namely inƀation, efſcient

we expanded our realm to include construction equipment

utilisation

segment, thereby offering multiple avenues to our

infrastructure spending to revitalize the ƀedging economy.

customers for supplementing their incomes. We pioneered

All the factors would complement and elevate the

services like Automalls, New Look and One Stop Shop,

foundation that we have set over the years. The future

which has not only enabled our customers (existing and

is surely exciting for the Company. I leave you with this

prospective) to experience a more efſcient, convenient

optimism.

of

demographic

dividend

Annual Report 2012-13

and

kick-start

11

a M an a Jana Gan

About us

Performa

nce in num b

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The road till now

Chairman’s overview

Managing Director’s review DISCOVERY CONSISTS OF LOOKING AT THE SAME THING AS

For more than three decades, we at Shriram Transport

EVERYONE ELSE AND THINKING SOMETHING DIFFERENT.

are creating value in a segment that was continued to

IT IS THEREFORE IMPORTANT TO KEEP PUSHING ONESELF

be perceived “high-risk”, not only in terms of the assets

HARDER AND CONTINUE ASKING THE RIGHT QUESTIONS.

ſnanced; but more importantly in terms of the customers

PERHAPS, IT IS FOR THE INHERENT TRAIT OF EACH OF US

they were ſnanced to. However, owing to our conviction

AT SHRIRAM TRANSPORT, THAT WE HAVE NOT ONLY BEEN ABLE TO EXPAND ACROSS PRODUCTS AND GEOGRAPHIES; BUT AT THE SAME TIME, HAVE BEEN ABLE TO RETAIN OUR ENTHUSIASM TO CONTINUE WHAT WE DO BEST – EMPOWERING ASPIRATIONS.

in our knowledge, processes and ability to forge longterm relationships, we not only brought the pre-owned asset ſnancing into the mainstream; but also enabled the traditionally ignored customer segment (comprising of ſrst time users and driver-turned-owners) to dream, aspire and achieve a social as well as ſnancial inclusion. Our business model started yielding results from the inception of the new century.

Going by the rate of growth achieved by the Indian economy 2003-04 onwards, the old saying of “when it rains, it pours” is an apt description. And how. The focus of the Government then to strengthen the nation’s infrastructure led to a rise in the demand for medium and heavy commercial vehicles. The boom in new commercial vehicles also translated to the pre-owned commercial vehicles on account of its affordability for the driversturned-owners and ſrst time users segments. At the same time, the continuous thrust on infrastructure and power sectors led to a mining boom across Indian states like Odisha and Karnataka. This further fueled the demand for M&HCVs, tippers, loaders, etc. The Indian real estate sector also witnessed feverish activity, leading to rising demand for construction equipment. We expanded our

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Mr. Umesh Revankar Managing Director

product portfolio to include construction equipment and

We initiated our vision by creating a scalable organisation

new commercial vehicles, thereby further strengthening

structure that would not only enable us to keep a tap on

our bonds with our enterprising customers. Then came

our assets but also protect its quality. The answer lied

the global ſnancial crisis in 2008.

in greater transparency and better diligence. We zeroed

The impact of global slowdown took its time to reach India, but by 2010, the signs started emerging. Even though the Indian economy was recording robust growth, for us at Shriram Transport, we started preparing for the hard times to come –by sharpening our axes or in other words, modernising the pre-owned commercial vehicles ſnancing market.

into a key impediment, which was “valuation”. This factor played the most crucial role in creating a fair, transparent and viable business model, not only for us but for our customers as well. With Truck Bazaar, we commenced a bidding process that led to fair price discovery for the asset ſnanced and thereby making repayment feasible by the customer. We introduced ShriramAutomall in

Annual Report 2012-13

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About us

a M an a Jana Gan

Performa

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The road till now

Chairman’s overview

2011, and further strengthened the process of valuation

centres will lead this revolution. Rural India is growing

in various markets. We also utilised our wide presence to

on account of higher employment, higher land prices and

offer a common platform for buyers and sellers to meet

new-found consumerism. The government’s initiatives like

using our One-Stop Shop.

Mahatma Gandhi National Rural Employment Guarantee

On the product side, we forayed into light commercial vehicles, since the segment was expected to outpace M&HCVs owing to lower economic activity, mining bans in several states and restricted entry times for M&HCVs in urban and tier-2 cities. With the hub & spoke model being increasingly preferred, HCvs are being utilised of inter-state and inter-city movement of good; while the LCVs have emerged as a favoured mode of achieving last mile connectivity (intra-city). Over the period, LCV sales are expected to be 3-4 times of HCVs owing to growing demand from smaller centres. We strengthened our processes and increased the Loan-to-Value requirements, as a precautionary measure. We also strengthened our presence in related vehicle categories such as tractors,

Act (MGNREGA) and Pradhan Mantri Gram Sadak Yojna have translated into better employment opportunities.

Improvement in income will not fuel higher consumption, but more importantly lead to people ſnding more avenues for growth. With rising demand for FMGC, consumables, etc. would lead to demand for commercial vehicles. With rising aspirations and growing industrial activities, the demand for CVs, construction equipment will be fueled by the new age entrepreneurs – drivers turned owners and ſrst time users in newer centres. At the same time, the lure of supplement income would also witness positive traction in terms of demand for pre-owned commercial vehicles (owing to lower initial capital requirement) in deeper markets.

three wheelers and passenger commercial vehicles to

Having preempted the growth trend, we are proud to be

keep sync with evolving demands of our enterprising

at the right place at the right time. We have strengthened

customers. Our ability to grow responsibly by preferring

our reach across India through 500+ branches. Our

“value-business”

to

investments over the years into a local pool of human

encouraging ſnancial performance as well. In 2012-13,

over

“volume-business”

led

resources have not only led to wider reach but also deeper

our consolidated assets under management stood at Rs.

client relationships. These initiatives would not only propel

50,000+ crore, as compared to Rs. 2,600+crore in 2003.

our growth faster during the impending upturn but more

However, past performance is not a barometer for future success. As a result, we are en-route to script the next phase of growth at Shriram Transport, which is expected to emanate from the rural and semi-urban centres.Allow me to share the rationale of my optimism. It is expected that more than 20,00,000 M&HCVs were sold within 2003-10.

Since an average commercial vehicle traditionally changes

importantly, would let us grow steadily if the economy deteriorates. As always, we continue to persevere. And more importantly, we continue to think newer possibilities each day. I would like to thank every stakeholder of the Company for keeping us motivated to achieve newer milestones each year. Looking forward for your continued support.

ownership after ſrst 3-4 years approximately; today, we

Umesh Revankar

are staring at a much larger opportunity expected to unfold

Managing Director

in due time. We believe that the rural and semi-urban

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Our ability to grow responsibly by preferring “value-business” over “volume-business” led to encouraging financial performance as well.

Mr. Umesh Revankar Managing Director

Annual Report 2012-13

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Enterprising India

ZERO ALONE MEANS OF NO VALUE IN THE NUMBER SYSTEM UNTIL PLACED ON THE RIGHT SIDE OF ANOTHER DIGIT. ONCE THERE, IT RESULTS IN TREMENDOUS APPRECIATION IN THE VALUE OF THE NUMBER ON ITS LEFT. THEREFORE, THE VALUE OF THE LEAST NUMBER IS DEPENDENT ON WHERE IT IS PLACED.

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Shriram Transport Finance Company Limited

Serving a segment traditionally ignored by the large banks and financial institutions, we at Shriram Transport chose the right side. The result, we not only became the largest asset financing NBFC in the country but also partnered a customer segment that forms the nation’s spine, since it is imperative for the underprivileged to grow at a faster rate if India is expected to regain its growth rate of 8+ per cent.

Consider this, being tenth richest in the world (in terms of gross GDP), India also ranks 149th in the world in terms of per capita income. Owing to

this disparity, the economic polarisation among low-income groups has been stark and persistent. At the same time, being the second most populous country, India is highly underpenetrated market for almost every good or service including commercial vehicles. India has 4 M&HCVs per ‘000 population, as against Japan (131), Thailand (90) and South Korea (88). With the proposed investments of Rs. 1.4 trillion expected to translate into infrastructure creation on the ground, there is immense scope for growth.

At Shriram Transport, we have created a robust foundation by aligning our business objectives with social needs. We chose to finance a segment of customers, which used the vehicle for earning their own livelihood. This segment, comprising of first time users and drivers-turned-owners was traditionally perceived “risky” due to high mobility, lower capital availability and highly underdeveloped banking habits. We tailored our business model to cater to this credit-starved segment by offering pre-owned commercial vehicles, owing to lower initial capital requirement. We instituted a unique relationship-based model, which not only enabled us to protect our asset quality but also forged long-term winwin partnership with our customers through higher referral and repeat businesses. On the other hand, we continued to nurture aspirations of our customers towards financial and social inclusion, thereby translating into better quality of lives for their families.

Not to forget, while our approach led to near zero delinquencies in our asset quality; it surely made anonymous customer segment stand up and be counted by large banks and financial institutions, in the right manner!

Annual Report 2012-13

17

Energising India

ASPIRATIONS KNOW NO BOUNDARIES. FOR CREATING A HEALTHY ECONOMY, IT IS IMPORTANT TO PROVIDE BETTER CHOICES OF GROWTH. IN A NATION THAT CELEBRATES THE IDEA OF PERSONAL FREEDOM, WE AT SHRIRAM TRANSPORT HAVE ALSO MOULDED OUR BUSINESS MODEL IN THE PAST DECADE TO WIDEN THE CHOICES FOR OUR CUSTOMERS.

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Shriram Transport Finance Company Limited

Having commenced our journey as a focused player in the pre-owned commercial vehicles financing market, we established our leadership as well as the credibility of the asset class through transparent processes and relationship-based model. On an average, the working life of a commercial vehicle is 12-14 years, during which it undergoes ownership change for at least 3-4 times. Typically the first sale takes place after 3-4 four years post that it becomes pre-owned vehicle.

Owing to the lower valuation as compared to a new truck, the pre-owned trucks are a perfect fit for first time users and drivers-turned-owners. Once the customer commences his entrepreneurial journey, in time he evolves to lower-age trucks and ultimately to the new trucks. At Shriram Transport, we have expanded our portfolio to include new trucks and thereby catered to the evolving needs of our customers.

At the same time, we continued to improve our product and solutions mix to stay in sync with the evolving needs of our customers. We introduced topup products like tyre financing, working capital, freight bill discounting and engine replacement loans. We continued to strengthen our value proposition for small truck owners, thereby tying up with Axis Bank for offering cobranded credit cards. We realised that with growing incomes, our customers also aspired to own a second or third vehicle, especially from related segments like passenger or agriculture vehicles. As a result, we further strengthened our assets portfolio to include passenger vehicles, tractors and construction equipment. Given the absolute need to beef up infrastructure in India, the Government has rekindled its investment focus on the sector. This would entail a huge demand for construction equipment – an opportunity we are addressing through our 100 per cent subsidiary, Shriram Equipment

Finance Company Limited. Led by a dedicated team of industry professionals, this Company provides end-to-end equipment financing solutions that also complement our business in a positive way.

There is always a choice and we are glad we chose to empower our customers with better choices and in the process energised them to achieve more.

Annual Report 2012-13

19

Enriching India

DOING WHAT IS MORALLY RIGHT MAY NOT BE ECONOMICALLY VIABLE. IT TAKES YEARS OF UNDERSTANDING AND FOCUS TO BUILD A PROFITABLE BUSINESS MODEL, WHICH IS ALSO SOCIALLY RESPONSIBLE. IN THE PAST 33 YEARS, WE AT SHRIRAM TRANSPORT HAVE CREATED AN ENTREPRENEURIAL-EMPOWERMENT ECOSYSTEM BY CONTINUOUSLY CONCENTRATING ON IMPROVING THE ECONOMIC VIABILITY.

In a financing business, protection of asset quality is largely dependent on the intent of the borrower and moreover the economic viability of the business in which the asset is employed. Being a financier to the traditionally under-banked segment, the intention of the borrowers is registered through Company’s relationship-based business model. However, since the borrowers use the assets financed personally to earn their livelihood and sustenance; the valuation plays a huge role in avoiding probable delinquency. In the preowned commercial vehicles financing, valuation has remained the single largest entry barrier.

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Shriram Transport Finance Company Limited

At Shriram Transport, we have transformed this single largest impediment to our greatest strength, owing to single-minded focus and experience. We identified key parameters that influence the valuation process for pre-owned commercial vehicles and progressively designed and instituted a valuation process. This not only enabled us to lend judiciously against the asset financed; but most importantly, it enabled our customers to run their operations more economically.

Most importantly, lending against the asset at realistic valuations led to strengthening our asset quality.

Having developed unique expertise in asset valuation, we chose to expand our reach across India. Having thoroughly researched the demographics, customer availability and market potential across key Indian centres, we chose to pace our growth responsibly.

This involved a process of strengthening operations across branches to mitigate any prospectivecredit quality and delinquency risks. By employing local talents in these branches, we not only developed a concrete understanding of the customer profile of the regions but also developed greater insights on all the potential signs of prospective defaults, using state-of-the-art technology, thereby infusing greater co-ordination between branches and regional offices. On the other hand, we aimed for inorganic growth by partnering with 500+ private financiers across India. These financiers owing to their small size, operate in clusters and offer high cost funds. By partnering with them, we assisted them with funds and consultancy services for asset valuation and got ready access to established relationships and a wider market.

In the process, we have not only created a profitable organisation, but also more importantly established a lucrative market segment that supports 16000+ employees, 500+ financiers and above all close to a million customers.

Annual Report 2012-13

21

Evolving India

SURVIVAL DOESN’T DEMAND STRENGTH OR INTELLECT, BUT MORE IMPORTANTLY THE RESPONSIVENESS TO CHANGE. AT SHRIRAM TRANSPORT, WE HAVE ALWAYS BELIEVED IN DRIVING A CHANGE RATHER THAN WAITING FOR ONE. FOR US, TO LEAD THE CHANGE COMES NATURALLY RATHER THAN ADAPTING TO IT.

22

Shriram Transport Finance Company Limited

As a result, we have firmly established the credibility and economic impact of the FTU segment as well as pre-owned vehicles. However, to sustain the growth momentum, one can’t rest on past laurels. Therefore we have consistently focused on delivering novel solutions to our existing and new customers by utlising our established strengths in reach, customer base, product understanding and technology.

In 2009, we initiated a novel concept called Truck Bazaar, which offered the prospective buyers and sellers of pre-owned vehicles, a common platform to discuss their needs and also transact. During 2010-11, Shriram Transport introduced Automalls as a unique platform to facilitate buying and selling pre-owned commercial vehicles that have been repossessed. This platform not only infused transparency to the valuation process but also assured the buyers of the vehicle relating to the vehicle’s title, quality

and performance. Besides, it also resulted into ready business for the Company, apart from fee-based income. Presently, the Company has 21 Automalls across India, owned and managed by Shriram Automall India Limited, a 100 per cent owned subsidiary of Shriram Transport.

The Company also utlised its own branch network more innovatively to garner new customers, through “One Stop Shop”. These comprise of electronic kiosk that are installed across all branches, displaying over 25,000 pre-owned assets at any given point of time mostly comprising of trucks, passenger vehicles, construction and agricultural equipment sourced from various consigners including end users visiting Shriram Branches from time to time. Through these Kiosks, the potential buyers can easily access the list of all the vehicles intended for sale. Once a buyer submits his interest regarding a particular vehicle, the local team to complete the transaction provides end-to-end personal assistance. Our efforts have led to infusion of processes in an otherwise unorganised industry.

On one hand, it has resulted in empowerment of our customers to run a profitable and rewarding business; on the other hand, it has enabled us to continue our mission to do well by doing good.

Annual Report 2012-13

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Empowering India

WITH GREAT POWER, COMES GREATER RESPONSIBILITY. AT SHRIRAM TRANSPORT, WE BELIEVE THAT CREATING SUSTAINED VALUE IS MUCH MORE THAN SOLELY GENERATING PROFITS AND BUILDING A BUSINESS MODEL. IT IS ABOUT CREATING ENTREPRENEURS WHO CREATE VALUE, THEREBY BROADENING THE HORIZON AND IMPACT OF GROWTH.

As a result, we at Shriram Transport have always believed in promoting the entrepreneurial instinct in our stakeholders through our knowledge, products and initiatives. Like charity, empowerment also begins at home. Owing to the unique relationship-based model, each relationship manager has the primary responsibility of not only maintaining the relationship but to ensure collections and asset quality.

24

Shriram Transport Finance Company Limited

Therefore, every relationship manager at branch level is an entrepreneur – a direct contributor to the Company’s revenue as well as a key decision maker for that account.

We have successfully created such novel business model that not only enabled us to replicate the spirit of entrepreneurship across the organisation but also empowered our customers, thereby creating a new segment of ‘now-bankable’ entrepreneur segment.

At the same time, we continue to institute innovative programs for creating responsible end-users. With the impending infrastructure boom and the demographic advantage in the country, the demand for commercial vehicles would be required to be complemented with trained drivers. Since most of the

truck drivers in the country are self-taught, the lack of training doesn’t only threaten road safety but adversely impacts the vehicle handling. As an initiative to empower this neglected segment, we have joined hands with PanIIT Alumni association (PIAI), a notfor-profit registered society of IIT alumni across campuses for the initiative - ‘Driving Skill Gurukul’. These skill Gurukuls are ‘Finishing Schools’ where the candidates are enrolled and imparted training for driving a Light Motor Vehicle, based on the Licensing rules and regulations. Since, heavy motor vehicle license requires one to have Light Motor vehicle license for the past 1-2 years (depending on the state), therefore the institute provides re-training opportunity. As a pledge towards creating entrepreneurs in the drivers-turned owners and first time users segments, we initiated the first Driving Skill Gurukul centre at Kolhapur, Maharashtra in 2010-11. While Shriram Transport sponsors the infrastructure and other operational expenses relating to the program; a nominal course fee is charged to ensure enrollment of serious students.

At Shriram Transport, we have therefore remained ahead of competition by not only customizing our products and solutions to suit our customers but also partnering our stakeholders towards greater value creation.

Annual Report 2012-13

25

a M an a Jana Gan

About us

Performa

nce in num b

ers

Corporate Social Responsibility

26

Shriram Transport Finance Company Limited

The road till now

Chairman’s overview

ram

Managing Director’s review

Shri sibility @ cial Respon Corporate So

At Shriram Transport, we believe that the future of the nation rests with the young generation and that these young minds need to be encouraged in every possible way.

Our Reach

Board of Dire ctors’ pr ofiles

Our Company supports these events through Shriram Foundation, the CSR wing of our Group. Along with Shriram Foundation, the Company participates in initiatives designed to enhance access to quality education in semi-urban and rural communities. The CSR vision of the Company encompasses each project aiming for sustainable beneſts for its stakeholders & intended beneſciaries; and taking into account all policy, technical, economic, ſnancial, institutional, management,

environmental,

socio-cultural & gender-related aspects.

In

India,

the

Government

Schools provide free education At Shriram Transport we believe

to children only till Standard 6

that being every business has a

and thereafter fees has to be paid

responsibility to make a positive

which are often unaffordable and

impact on the society. In the

therefore a cause for children

past three decades, we have

of transporters or truck drivers

woven a credible business model

dropping out of school at the primary education stage. At

around empowerment and upliftment of weaker section

Shriram Transport, we believe that the future of the nation

through promoting ſnancial inclusion. However, we continue

rests with the young generation and that these young minds

to support a host of social initiatives in the area of education,

need to be encouraged in every possible way. Consequently,

healthcare and vocational training as a conſdence building

in 2012-13, we launched an initiative to help such deserving

measure with the communities we work within.

children by way of an “Education Support Scheme” for the

Annual Report 2012-13

27

About us

a M an a Jana Gan

Performa

nce in num b

ers

The road till now

Chairman’s overview

Aiming at a vision for an energised and empowered community around that acts as a catalyst in its own development and sustenance;

children of small transporters,

and

drivers and the staff of ƀeet

besides

owners. The program under

involvement

taken by CGTA in association

include provision of practical

with the Company witnessed

skills training in technical and

distribution of scholarships to

vocational subjects for children,

150 students. In 2013-14, we

local

plan to empower at least 2,000

members. Schools actively and

children of small road transport

continuously

operators through this scheme.

and families as partners in

Aiming at a vision for an

helping students and schools

energised

empowered

succeed, and both schools and

community around that acts as

community work collaboratively

and

a catalyst in its own development

sustenance; fostering

youth

&

our

community

empowerment

and

community

engage

Shriram Transport Finance Company Limited

parents

and share resources in order to strengthen student, family, and community learning.

28

focus

ram

Managing Director’s review

Shri sibility @ cial Respon Corporate So

Our Reach

Board of Dire ctors’ pr ofiles

Awards and Accolades

Shriram Transport was awarded “Best NBFC” in “Asset Backed Lending” category at CNBC TV18 Best Bank and Financial Institution Awards 2012 held in October 2012.

Receiving the award from by Chief Guest Dr. C. Rangarajan, Chairman of the Prime Minister’s Economic Advisory Council is Mr. Umesh Revankar, MD, STFC.

Annual Report 2012-13

29

a M an a Jana Gan

About us

Performa

nce in num b

ers

The road till now

Chairman’s overview

Our Reach Adilabad, Adoni, Agartala, Agra, Ahmedabad, Ahmednagar, Ajmer, Akola, Alappuzha, Aligarh, Allahabad, Alwar, Amalapuram, Amaravati, Ambala, Ambikapur, Amreli, Amritsar, Anakapalle, Ananathapur, Anand, Anchal, Angamaly, Angul, Arakonam, Arani, Ariyalur, Arrah, Asansol, Attur, Aurangabad, Azadpur

Bachheli, Baddi, Bagalkot, Balasore, Balghat, Bankura, Banswara, Baramati, Barasat, Bardoli, Bareilly, Barmer, Baroda, Basavakalyan, Batlagundu, Beed, Begusarai, Behraich, Belgaum, Bellary, Bengaluru, Berhampur, Betul, Bhagalpur, Bhandara, Bharatpur, Bharuch, Bhatinda, Bhavanipuram, Bhavnagar, Bhilai, Bhilwara, Bhimavaram, Bhiwandi, Bhivani, Bhopal, Bhubaneswar, Bhuj, Bidar, Bijapur, Bijnore, Bikaner, Bilashpur, Bilaspur, Biora, Birbhum, Bokaro, Bongaigaon, Bundi, Burdwan, Burhanpur

Calicut, Challakere, Chamarajnagar, Chandan Nagar, Chandapura, Chandigarh, Chandikhol, Chandrapur, Channapatna, Channarayapatna, Chattarpur, Chengalpattu, Chennai, Chickballapur, Chidambaram, Chikkamangalore, Chikodi, Chinchwad, Chindwara, Chiplun, Chitradurga, Chittore, Chittorgarh, Chowtuppal, Coimbatore, Coochbehar, Cuddalore, Cuddapah, Cumbum, Cuttack

Eluru, Ernakulam, Erode, Etawah

Faizabad, Faridabad, Farukhabad, Fathepur

Haldwani, Hanmana, Hanumangarh, Harihara, Hassan, Haveri, Hazaribagh, Himayathnagar, Himmatnagar, Hindupur, Hisar, Hodal, Hooghly, Hoshangabad, Hospet, Hosur, Hubli, Hyderabad

Gadag, Gadhinglaj, Gadwal, Gajuwaka, Gandhidham, Ganganagar, Gangavathi, Gangtok, Gaya, Gobichettipalayam, Godhara, Godhavarikhani, Gondia, Gorakhpur, Gudivada, Gudiyatham, Gudur, Gulbarga, Gummidipoondi, Guna, Guntur, Gurgaon, Guwahati, Gwalior

Ilkal, Indore, Itchapuram

Kadiri, Kaithal, Kakinada, Kallakurichi, Kalyan, Kanchangad, Kanchipuram, Kangra, Kankavali, Kannur, Kanpur, Karad, Karaikudi, Karimnagar, Karnal, Karur, Kasaragod, Kathua, Katni, Kattappana, Kattedan, Kawardha, Kayamkulam, Keonjhar, Khamgaon, Khammam, Khandwa, Kharagpur, Kodada, Kolar, Kolhapur, Kolkata, Kollam, Kompally, Koppal, Korba, Kota, Kothagudem, Kothputali, Kottayam, Kovilpatti, Krishnagiri, Krishnanagar, Kukatpally, Kullu, Kumbakonam, Kumta, Kundapura, Kunnankulam, Kurnool

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Shriram Transport Finance Company Limited

Dahod, Darbhanga, Dausa, Davangere, Deepika, Dehradun, Deoghar, Dewas, Dhamtari, Dhanbad, Dhar, Dharmapuri, Dharwad, Dhule, Dindigul, Durgapur

Jabalpur, Jagadamba, Jagdalpur, Jaipur, Jaisalmer, Jajpur, Jalandhar, Jalgaon, Jalna, Jamkhambhalia, Jammu, Jamnagar, Jamshedpur, Janjgir, Jhalawar, Jhansi, Jharsuguda, Jhunjhunu, Jodhpur, Jorhat, Junagadh, Jyepore

L B Nagar, Lakhimpur, Lakhimpurkhiri, Latur, Lingasugur, Lucknow, Ludhiana

ram

Managing Director’s review

Shri sibility @ cial Respon Corporate So

Raibareilly, Raichur, Raigarh, Raipur, Rajahmundry, Rajapalayam, Rajkot, Rajnandgaon, Rajpipla, Rajsamand, Rameswaram, Ranchi, Ranipet, Ratangarh, Ratlam, Ratnagiri, Rayagada, Renukoot, Rewa, Rewari, Roha, Rohtak, Rourkela

Padi, Palakkad, Palani, Palanpur, Palayamkottai, Pandharpur, Panjim, Paramakudi, Paravathipuram, Parbhani, Patan, Pathanamthitta, Pathankot, Patna, Pattukottai, Pendurthi, Piduguralla, Pollachi, Pondicherry, Porbandar, Proddatur, Pudukottai, Pune, Puri, Purnea, Pusad, Puttur

Sadulpur, Sagar, Sagara, Sahajahanpur, Saharanpur, Sahibabad, Salem, Salur, Sambalpur, Sandur, Sangagiri, Sangamner, Sangareddy, Sangli, Sangrur, Saraipalli, Satana, Satara, SawaiMadhopur, Secundrabad, Sendhwa, Shahapur, Shahdol, Shillong, Shimla, Shimoga, Shivpuri, Sholinganallur, Shrirampur, Sikar, Silchar, Siliguri, Sindhanur, Singarayakonda, Sirmour, Sirohi, Sirsa, Sirsi, Sivaganga, Sivakasi, Solapur, Sriganganagar, Srikakulam, Srinagar, Sultanpur, SulthanBathery, Sulur, Surat, Surendranagar

T Dasarahalli, Tadepalligudem, Tadipatri, Tambaram, Tamluk, Tanjavur, Tenali, Tenkasi, Tezpur, Thalassery, Thane, Thenni, Thirunagar, Thiruppathur, Thiruvallur, Thiruvarur, Thuraiyur, Tindivanam, Tinsukia, Tiptur, Tiruchendur, Tiruchengode, Tirunelveli, Tirupathi, Tiruppur, Tirur, Tiruvannamalai, Tiruvotriyur, Tiruvur, Trichur, Trichy, Trivandrum, Tumkur, Tuticorin

Valliyoor, Vapi, Varanasi, Vatakara, Vellore, Vijayawada, Villupuram, Virudhachalam, Virudhunagar, Visakhapatnam, Vizianagaram

Board of Dire ctors’ pr ofiles

Nadiad, Nagapattinam, Nagercoil, Nagole, Nagour, Nagpur, Namakkal, Nanded, Nandigama, Nandurbar, Nandyal, Narasaraopeta, Narasipatnam, Narsinghpur, Nashik, Navi Mumbai, Navsari, Neemuch, Nellore, New Delhi, Neyyatinkara, Nirmal, Nizamabad

Machilipatnam, Madanapalle, Madhurawada, Madikeri, Madiwala, Madurai, Mahaboobnagar, Malda, Malegaon, Mancherial, Mandapeta, Mandi, Mangalore, Manjeri, Marathali, Markapuram, Marthandam, Mayiladithurai, Medak, Meerut, Mehsana, Melur, Mettupalayam, Mettur, Miryalaguda, Moga, Moradabad, Morbi, Morena, Motihari, Mudbidri, Mumbai, Murshidabad, Muzaffarpur, Mysore

Ongole, Ooty, Osmanabad, Ottanchatram, Ottapalam

Our Reach

Wadi, Wadkhal, Waidhan, Warangal, Wardha, Wardhaman Nagar, Washim

Udaipur, Udhampur, Udupi, Ujjain, Una

Yamuna Nagar, Yavatmal

Annual Report 2012-13

31

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