Umesh Revankar, MD and CEO, Shriram Transport Finance, talks about the financial results for March quarter, the decline in NPA, impact of the moratorium on the company’s books and rural economy during a candid chat with Swati Khandelwal, Zee Business. Edited Excerpts:  

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Q: Provide some highlights of the numbers that Sriram Transport Finance has posted in the recent past? How you managed the NPA levels which has declined and is their concerns in any specific pockets?

A: Basically, it was the result of last quarter (March quarter) when the market situation was quite good and this helped us in controlling the NPA numbers. Then a moratorium was announced. The lockdown was announced after March 20, 2020, and the business was doing well before the imposition of the lockdown. So, our NPA levels are reasonable. I think we may face some challenges in the first quarter of the financial year 2020-21 in respect to customer earnings as the lockdown was a bit tighter for one month, which was relaxed slightly in May and was completely relaxed in June. I believe that the economy will also revive after September.

Q: What is your view on asset quality and how the moratorium has impacted your books?

A: We kept the moratorium as an open offer for every customer and framed a policy under which anyone can use the facility. At the same time, we also encouraged the customers with earnings to pay it and 84% people have paid it in March, 23% paid it in April and 52% paid it in May. But, it was a part-payment in March and April but paying a part of the loan even after taking a moratorium is a good step. So, I feel that the customers are back in business and around 60% of the customers are using their vehicles and are doing business and are generating revenues, which is good. However, passenger transportation in urban cities that comes under the red zone is facing challenges at present as the transportation facility has not started properly in these zones. Uber, Ola and other taxies are also facing challenges. Secondly, long-distance transportation is also facing challenges as inter-state vehicle don’t have required facilities and industrial goods manufacture hasn’t started properly. 

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Q: Forecasts are that the monsoon will be good this year and the rural economy will do better as compared to urban. What is your view on it and what bounce back is expected in the business from the rural economy?

A: A favourable demand visible to us in the rural area because the harvest has remained bumper. Harvest movement was completed in May. The state and the central government have procured food grains. Part payments have been released and the remaining part payment will be made in June and July. Now, the farmers will need more money for the sowing of the Kharif crop. It is a good time for people in rural areas to buy a new tractor and other vehicles as some money is available with them as they can put the margin to buy the vehicle. So, the demand for a used vehicle is high in the rural market. Prediction for good monsoon has also increased their morale.