FridayOL

Toronto, ON – Shriram Finance, a leading provider of financial solutions, is strategically adjusting its borrowing approach to mitigate rising costs and navigate the impact of delayed construction activities. This shift comes as an early and prolonged monsoon season has pushed project timelines into August and September, impacting the Assets Under Management (AUM) related to construction equipment in the first quarter of fiscal year 2026 (Q1FY26).

According to Umesh Revankar, a key executive at Shriram Finance, the unexpected weather patterns significantly hampered construction progress during the crucial early months of the year. Traditionally, a robust start to the fiscal year is vital for the construction equipment sector, but the monsoon's early arrival created a ripple effect, leading to a noticeable decline in AUM for construction equipment.

“The early onset of the monsoon season and the subsequent delays in construction activities have been a factor in the Q1FY26 AUM performance for our construction equipment portfolio,” Revankar explained. “We're actively responding to this challenge by re-evaluating our borrowing strategy to optimize costs and ensure we are well-positioned to support our clients as construction activity picks up pace.”

Strategic Borrowing Adjustments: What's Changing?

Shriram Finance's revised borrowing strategy is expected to focus on several key areas:

• Diversifying Funding Sources: Exploring a wider range of borrowing options, including both domestic and international markets, to reduce reliance on any single source. This diversification helps mitigate risk and potentially secure more favorable interest rates.
• Optimizing Debt Maturity Profile: Strategically managing the maturity dates of existing debt and new borrowings to minimize refinancing risk and capitalize on market opportunities.
• Active Hedging Strategies: Employing hedging techniques to protect against fluctuations in interest rates and currency exchange rates, ensuring predictable costs and improved financial stability.
• Focus on Efficiency: Continuously reviewing and streamlining internal processes to improve operational efficiency and reduce overall borrowing costs.

Looking Ahead: Navigating the Construction Sector

While Q1FY26 presented challenges, Shriram Finance remains optimistic about the long-term prospects of the construction sector in Canada. The government's ongoing infrastructure investments and the continued demand for residential and commercial properties are expected to drive growth in the coming quarters.

“We believe the current situation is temporary, and the construction sector will rebound as the monsoon season subsides and projects resume their planned timelines,” Revankar added. “Our adjusted borrowing strategy will provide us with the financial flexibility to support our clients during this transition and capitalize on the opportunities that lie ahead.”

Shriram Finance’s proactive approach to managing its borrowing strategy highlights its commitment to adapting to changing market conditions and delivering sustainable value to its stakeholders. The company's focus on diversification, efficiency, and risk management positions it well to navigate the challenges and capitalize on the opportunities within the Canadian financial landscape.