TRANSPORT

in the nature of FORM2A - MEMORANDUM CONTAINING SALIENT FEATURES OF THE PROSPECTUSconsiderations described below and elsewhere in the Prospectus.Unless the context otherwise requires, the financial informationused in this section is derived from and should be read inconjunction with the Reformatted Unconsolidated SummaryFinancial Statements and the Reformatted ConsolidatedSummary Financial Statements of our Company.Investors are advised to read the following risk factors carefullybefore making an investment in the NCDs offered in this Issue.You must rely on your own examination of our Company andthis Issue, including the risks and uncertainties involved.INTERNAL RISK FACTORSRisks relating to our Company and its Business1. Our financial performance is highly sensitive to interest ratevolatility.2. Our business requires raising substantial capital by the wayof borrowing, and any disruption in funding sources wouldhave a material adverse effect on our liquidity, financialcondition and/or cash flows.3. If we are unable to manage the level of NPAs in our loanassets, our financial position, results of operations and cashflows may suffer.4. Our business is focused on commercial vehicle financefor new and pre-owned commercial vehicles and any adversedevelopments in this sector would adversely affect our resultsof operations.5. High levels of customer defaults could adversely affect ourbusiness, financial condition, results of operations and/orcash flows.6. We may not be able to recover, on a timely basis or at all,the full value of collateral or amounts which are sufficient tocover the outstanding amounts due under defaulted loans.7. The Company is involved in certain legal proceedings foralleged contravention of certain State legislations in Indiarelating to “money lending” activities. Any unfavourableoutcome in such proceedings and the imposition of anyadditional restrictive statutory and/or regulatory requirementsmay adversely affect our goodwill, business prospects andresults of operations.8. A large part of our collections are in cash and consequentlywe face the risk of misappropriation or fraud by our employees.9. Our significant indebtedness and the conditions andrestrictions imposed by our financing arrangements couldrestrict our ability to conduct our business and operations inthe manner we desire.10. We have in the past acquired, and may continue to acquirein the future, portfolios relating to various credit and financingfacilities from banks and other institutions on a non-recoursebasis. If the performance of such portfolios deteriorates, ourbusiness, financial condition, results of operations and/orcash flows may be adversely affected11. We face increasing competition in our business whichmay result in declining margins if we are unable to competeeffectively.12. We may not be able to successfully sustain our growthstrategy.13. We may not be able to successfully diversify our productportfolio.14. Our loan portfolio may no longer continue to be classifiedas priority sector advances by the RBI.15. We may experience difficulties in expanding our businessinto new regions and markets in India.16. Any downgrade of our credit ratings would increaseborrowing costs and constrain our access to capital andlending markets and, as a result, would negatively affect ournet interest margin and our business.17. If we are unable to successfully expand, maintain orleverage our partnership arrangements with private financiersinvolved in commercial vehicle financing, our businessprospects, results of operations, financial conditions and/orcash flows may be adversely affected.18. A decline in our capital adequacy ratio could restrict ourfuture business growth.19. As part of our business strategy we assign or securitizea substantial portion of our loan assets to banks andother institutions. Any deterioration in the performance of anypool of receivables assigned or securitized to banks and otherinstitutions may adversely impact our financial performanceand/or cash flows.20. System failures or inadequacy and security breaches incomputer systems may adversely affect our business.21. We may not be able to maintain our current levels ofprofitability due to increased costs or reduced spreads.22. We face asset-liability mismatches which could affect ourliquidity and consequently may adversely affect our operations,profitability and/or cash flows.23. The trade mark/service mark and logo in connectionwith the “Shriram” brand which we use is licensed to usand consequently, any termination or non-renewal of suchlicense may adversely affect our goodwill, operations andprofitability. Further, our current logo which we are usingfor our corporate publicity campaigns and as included in theProspectus is not registered. Our inability to register such logoand/or to adequately protect the same may adversely affect ourgoodwill, operations and profitability.24. We have certain contingent liabilities which may adverselyaffect our financial condition.25. We are involved in various legal and other proceedingsthat if determined against us could have a material adverseeffect on our financial condition and results of operations.26. Inaccurate appraisal of credit may adversely impact ourbusiness.27. We may have to comply with strict regulations andguidelines issued by regulatory authorities in India.28. Our ability to assess, monitor and manage risks inherentin our business differs from the standards of some of ourcounterparts in India and in some developed countries.29. Our Promoter beneficially owns more than 25% of ourequity share capital and accordingly has the ability to exercisesignificant influence over the outcome of matters submitted toshareholders for approval, and their interests may differ fromthose of other holders of Equity Shares.30. We have entered into certain related party transactions.31. Any failure by us to identify, manage, complete andintegrate acquisitions, divestitures and other significantShriram Transport Finance Company Limited41