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Mumbai – Shriram Finance, a leading Indian non-banking finance company (NBFC), is exploring the possibility of raising funds through a yen-denominated issuance. According to CEO Ajay Piramal, the move is part of a broader strategy to diversify the company’s borrowing sources and reduce reliance on traditional funding mechanisms. While discussions are currently in the preliminary stages, the potential yen offering signals Shriram Finance's proactive approach to managing its financial risk and capitalizing on favorable currency exchange rates.

The decision to consider yen-denominated debt comes as Indian companies increasingly look to international markets for funding. Rising interest rates in India and a relatively stable yen have made it an attractive option for companies seeking to lower their borrowing costs. Diversifying currency exposure also helps mitigate the impact of fluctuations in the Indian rupee.

“We are looking at various options for funding, including yen-denominated bonds,” Piramal stated on Monday. “It is still in the early stages, but we are exploring the possibility.” He emphasized that the company's primary goal is to maintain a healthy balance sheet and ensure access to a variety of funding sources.

Shriram Finance has traditionally relied on bank loans and domestic debt markets for its funding needs. However, the company recognizes the importance of diversifying its funding sources to enhance its financial resilience. A yen-denominated offering would provide a hedge against rupee depreciation and potentially offer more competitive interest rates.

Benefits of Yen-Denominated Funding for Shriram Finance:

• Cost Optimization: Potentially lower interest rates compared to rupee-denominated debt.
• Currency Hedging: Protection against rupee depreciation.
• Diversification: Reduces reliance on domestic funding sources.
• Enhanced Financial Resilience: Strengthens the company's balance sheet.

The Indian NBFC sector has been under increased scrutiny in recent years, particularly regarding its asset quality and funding stability. Shriram Finance's proactive approach to diversifying its funding profile demonstrates a commitment to sound financial management and long-term sustainability. Analysts believe that this move could set a positive precedent for other Indian NBFCs looking to explore international funding options.

While the specifics of the potential yen offering, such as the size of the issuance and the expected yield, remain to be determined, the announcement highlights Shriram Finance's commitment to innovation and its ability to adapt to changing market conditions. Investors and market observers will be closely watching the developments in the coming weeks and months.

Shriram Finance is a significant player in the Indian financial landscape, specializing in vehicle finance, gold loans, and loans to small and medium-sized enterprises (SMEs). The company's financial health and strategic decisions have a ripple effect across the Indian economy.