Two days after announcing a succession
plan via the trust route, and his plans to mentor the new board, financial services major Shriram Group’s founder R Thyagarajan
said he expects the group to scale up two to three-fold in the next decade. In an interview with , the industry veteran talks about the upcoming restructuring of the group companies, the idea behind the new board, the industry in a post-Covid world and his mentorship role.
How significant is the appointment of the board of management for the Group’s future?
The board of management will steer the growth strategy for the entire Group and further its mission to provide finance to the under-served. Several well-wishers and stakeholders had told us that there are uncertainties and concerns around the succession
plan, and this board has been set up to address that. The idea is to put the ownership of the Group in the hands of a few key executives rather than an individual. This goes beyond the usual expectation of replacing an individual with another and putting control in the hands of that one person.
This system of collective decision-making is something that has been at work at Shriram for a long time. The diversified but inter-linked nature of our businesses warrants collective management where each member can bring their expertise, draw from their strengths and work together with the common objective of building a sustainable and successful organisation.
We figured that key seniors should now help navigate the group further. These key handpicked executives will look at the broader well-being of the Group, focus on its five to six core activities of offering relevant financial services that further the group's ethos and help us continue our initiatives targeted at the under-served community and enhancing financial inclusion.
These leaders have been with the Group right from the beginning and understand its DNA, know the companies
and the people that work in it. So they are the right people to take the business forward and continue to create value for the consumers.
Where do you want to see the group in terms of size and revenue by 2030? What is your vision for the group going ahead?
We started the Group with a capital of Rs 100,000 and today we manage funds worth over Rs 2 trillion. I take more pride in the fact that we have catered to 21 million customers, than the actual scale of our AUM (assets under management). We are not in a wide range of services and have instead focussed on a few core businesses that we truly believed were required, and asked for, by our client base. We have become leaders in certain segments, namely, commercial vehicle loans, two-wheeler and SME loans and will continue to grow there. We will also grow our cross-sell initiatives around insurance and wealth management. Our focus would be to keep bringing more customers and enhance our scale of financial inclusion. And I’m sure as we digitise this inclusive journey, along the way, we would be able to scale up 2-3x over the next decade.
How important in your view is the upcoming restructuring for your company? When can we expect it?
In an individual capacity, I have been more or less in a consulting or mentoring role for the last four-five years and will continue to be available in that position. At the organisation level, restructuring is an ongoing process. We are in the process of talking it through and some sort of reconstruction could be expected in the coming months. However, nothing is concrete as yet and we will inform the media and all stakeholders when we have anything to communicate on that front.
Being the mentor, which are the new growth and diversification opportunities that you see going ahead?
The Shriram Group
has been providing finance for commercial vehicles for the last 40 years, two-wheelers for over 20 years, life insurance for 15 years and general insurance for about 12 years. Each vertical is doing incredibly well. However, the focus of the group has never been on wealth creation, but on serving the community. This is reflected in the lines of business that we have ventured into over the years. When we started, truck operators were accessing loans from the unorganised sector at 40-50 per cent interest and we saw the opportunity to not just give them financing at reasonable rates but also ensure their well-being and safety. Today, we serve over 2 million truck operators and can claim that we have made a significant difference to the community.
The ethos of the Group has always been this and will continue to be so for all group companies.
The board of management will put in place certain guidelines and recommendations for the Group and for each business unit and its head. So without managing any company directly, it will help and guide the entities and ensure that all responsibilities are discharged. We will have to see how it evolves, but one of the focus areas will be to accelerate the thrust on synergising Group operations and leveraging the different business networks and channels to offer a complete bouquet of products and services to our consumers.
From a financial services industry point of view, how are you seeing the post-Covid scenario and the recovery?
The financial services industry is always at the forefront of any economic boom or adversity. This is amongst the first sector to get impacted. For the Shriram Group, two of our primary business lines are linked to the auto industry – commercial vehicles and two-wheelers. The automobile industry—both from a lending and insurance perspective—has taken a significant hit due to the near stagnation in vehicle sales during the Covid-19 pandemic. Things are starting to look up during the festival season and the pick-up in demand is higher than expected. The economy is also beginning to stabilise. The markets continue to be buoyant and private sector capital expenditure appears to be in revival mode. Given the number of uncertainties at this point, however, one can only hope that the long-feared third wave does not materialise. At present, businesses are returning to buoyancy in the financial services sector and we expect the industry to grow well.
Being the founder, how do you look back at the Shriram Group’s journey so far?
We have come a long way since we started the Group with the chit fund business in 1974. What started as an attempt to serve the under-served and offer them products and funds they did not have access to, has today evolved into a more customer-centric rather than product-centric approach. As a Group and at every branch level, our sincere effort is to build a relationship with the customer and service them in every way beneficial to them, whether it is by assisting them with a loan or helping them get insured or buying a new home/vehicle.
In all this, the one-point objective has remained constant—to serve the community around us, push for financial inclusion and create value for our family of consumers. When our customers have faith in us, they come back to us every time they need financial help and trust us to guide them correctly. This has enabled us to venture into new lines of business over the years because we could offer our existing clients differentiated products. It has worked for us and we will continue to hold on to this core philosophy and business ethos.