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Shriram founder Thyagarajan charts out group’s long-term strategy

The announcement comes in the wake of intense speculation that Shriram Capital has been exploring a merger of its two lending companies, Shriram Transport Finance Ltd and Shriram City Union Finance Ltd.

November 30, 2021 / 07:51 PM IST
Shriram Transport Finance Company (Representative image)

Shriram Transport Finance Company (Representative image)

RT (R. Thyagarajan) is Shriram group and Shriram group is RT. Ask anybody in the city of Chennai, and this is what they would say. Ask Thyagarajan, and he will respond: “I don’t own a share in the group. I don’t hold any position. I am not on the board of any company.” All the same, he is the face of the group and the man to speak on issues related to it.

On Tuesday, Thyagarajan announced the formation of a board of management, Shriram Ownership Trust, which will hold a 30.7 percent stake in Shriram Capital. Another 13.47 percent will belong to Shriwell Trust. The two trusts represent the original owners of the Shriram group.

For many, the Shriram Group remains an enigma. Almost 140 people are said to be part of the founding team of the group. As it expanded, the group opened up to investors. Billionaire Ajay Piramal acquired a 20 percent stake in Shriram Capital for ₹2,014 crore in 2014. TPG Capital holds 9.4 percent and South Africa-based Sanlam Group 26 percent.

The latest move is aimed at developing and driving the group’s long-term strategy. This newly announced team comprises D.V. Ravi, managing director, Shriram Capital; R. Duruvasan, whole-time director, Shriram Capital; Umesh Revankar, non-executive director, Shriram Capital and vice-chairman and managing director, Shriram Transport Finance; and Jasmit Singh Gujral, non-executive director, Shriram Capital and executive vice-chairman, Shriram General Insurance.

Shriram Ownership Trust actually functions as the promoter group. “The promotership rests with the trust and not with an individual or family,” said Thyagarajan.

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The officials who will be moving to the board of the promoter company will step down from their individual roles. The transition for individual companies will be put in place over the next few weeks and months.

Shriram Capital is the holding company for businesses ranging from financial services and insurance to asset management. This includes listed entities Shriram City Union Finance and Shriram Transport Finance. Shriram Capital holds about 25.56% in Shriram Transport Finance and 33.86% in Shriram City Union Finance, as per exchange data.

The announcement comes in the wake of intense speculation that Shriram Capital has been exploring a merger of its two lending companies, Shriram Transport Finance Ltd and Shriram City Union Finance Ltd. People aware of the matter have indicated that there will eventually be one entity, with Shriram Capital too being merged.

Discussions on the restructuring process are largely around two broad options: merge the two listed subsidiaries with Shriram Capital or amalgamate the two subsidiaries first and then merge Shriram Capital with the combined entity. During an interaction with this correspondent some time ago, Thyagarajan seemed to favour the latter option, which would give the holding company’s shareholders a listed platform from which to exit.

When pointed out that Shriram Transport and Shriram City operate in different segments, Thyagarajan said their business templates were essentially the same—lending and recovery. In a way, Tuesday’s announcement has brought much-needed clarity on the ownership and management of the Shriram group.

Several people associated with him say that as founder, Thyagarajan created a group around its employees. The succession plan, as laid out by him on Tuesday seems to confirm this, as he has handed over the management of the group to a set of its own long-term employees. While his family is out of the picture, he will as he has often said be there always as a guide.
KT Jagannathan is a senior journalist based in Chennai
first published: Nov 30, 2021 07:51 pm
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