2.2.2012
Shriram group founder Chairman R Thyagarajan
The Statistician who struggled to measure the moves of regulators
V Balasubramanian
In my long career in financial journalism, I have moved with several business leaders. It is worth profiling the interesting business journey of these leaders for inspiring the gen next. I would like to share my thoughts about the most admiring entrepreneur-cum business leader I have come cross in the financial market in Tamil Nadu .
He is Mr R Thyagarajan, founder Chairman, Shriram Group, who is now playing more a mentor role. He is known for his simplicity, humility and a sharp business sense.
The group has emerged as one of the largest financial super markets in the country offering a range of products and services. It has turned a darling of PEs and foreign and Indian investors. But, not many journalists would know the serious challenges and turbulent times faced by RT and the group.
In the mid nineties, his group almost ran the risk of collapse when regulators breathed under the neck of non-banking finance companies, which were registered with RBI and mobilising public deposits. How he bounced back to build one of the largest financial super markets in the country still remains an untold tell- tale story.
R Thyagarajan, one of the three founders of Chennai-based Shriram group had his first brush with a regulatory fiat a decade ago. It was that time when scores of RBI registered and non- registered ( those coming under companies act) were collapsing like a pack of cards in the wake of erstwhile CRB Capital scam in the stock market. Following RBI’s stringent norms to regulate the deposit taking NBFCs, three entities of Shriram group came under cloud.
That day, one evening, when RT and team were seriously discussing their business plans, RBI faxed a release to media offices stating the three companies are barred from accepting fresh deposits as they had no credit rating. RT was shocked as the companies did not solicit any fresh deposit from the public but only carried a statutory advt in a local paper for renewal of deposits. Whatever it is, it got the attention of regulators. It would have led to a run on the companies but for the timely intervention by RT to salvage the situation. By converting a large portion of deposits into debt instruments he restored confidence among investors.
Soon, he met with second crisis when Shriram’s mutual fund venture bombed after incurring the wrath of Sebi and was de-recognised. Since then, RT used his energy for building a strong financial group. Today, the group is managing funds over Rs 40,000 crore offering a bouquet of financial products- chit funds, truck financing, SME financing, consumer loans, life and non-life insurance products, equipment financing, private equity ( through a JV with TVS group). It is gearing up to float a bank and enter home finance market.
The statistician turned financial stalwart, who struggled to measure the moves of regulators and fought with credit rating agencies on their low rating of his group entities, succeeded in attracting copious investments by scores of PE players like Chrys capital, TPG capital, Merrill Lynch, Cambridge, ICICI ventures, New bridge capital, Asia Bridge and Bessemer. They have all invested in Shriram Transport Finance ( Truck financing), Shriram city union Finance ( consumer and SME financing) and the group holding arm, Shriram Capital.
In addition, he attracted investment by strategic investors like Citicorp, Axis Bank, Reliance Capital and FMO of Netherlands. STFC and SCUF have also raised over Rs 2000 crore from the capital market through NCDs. They have huge market capitalization of their listed stocks.
Shriram Group had its humble beginning with Chit Fund business in 1974. R Thyagarajan, AVS Raja and
T Jayaraman were the “three musketeers” who ventured into these businesses. Not many in the Financial services industry thought at that time, this small Chit Funds business in Chennai would indeed be the foundation for the financial conglomerate that Shriram is today.
Post crisis, RT emerged the real face of the group. Hailing from Sirkazhi in Thanjavur district, RT obtained his masters in mathematical statistics from Indian statistical institute. He is also an associate of chartered insurance institute, London. He spent 15 years with New India Assurance ( before nationalization) and another 10 years with JB Boda- the largest reinsurance and insurance broker in Asia.
Inculcating the philosophy of” putting people first”, he has transferred Shriram group into India’s premier networked financial service supermarket. He has effectively utilised the large network of branches, agency force and investors base to expand the product range. Long before Indian businessmen came to know about venture capital funds, Mr Thyagarajan had played an “ angel investor” in his own way.
Over the years, RT played a major role in nurturing entrepreneurship in diversified fields. Shriram group has invested in ventures focused on businesses like IT, engineering services, auto components, pet & flexible packaging, musical instuments, medical devices, real esate , power and infrastructure.
He is credited with retaining talent with most of the companies having long serving home- grown CEOs. To give a sense of ownership he has made all the 32 professional CEOs as big stake holders of their ventures and some of them are also stake holders in the holding arm, Shriram capital. RT is also known for hiring ex- RBI and bank officials for managing his businesses and dealing with regulators and policy makers.
Perhaps, his biggest contribution is to the truck financing industry in developing a large number of small transport operators. Ten years ago, STFC was a small player in truck financing. Today, it is country’s largest asset financing ( pre owned and new trucks and other vehicles) company with over Rs 36,000 crore assets under management. With 391 branch offices, it has a customer base of over five lakh.
Similarly, Scuf which began operations in 1986, is a leading player in financing consumer durables, two wheeler, SMEs across India. Shriram Property, which acquired the large land parcel of erstwhile Standard Motor property in Chennai for building IT infrastructure, has emerged a leading realty player . RT has also forged a strong alliance with South Africa’s insurance group, Sanlam for building his non-life and life insurance businesses.
The group also recently acquired Vishal retailing in Delhi with the support of TPG capital which had invested in the company. It is also gearing up to float a bank and enter home finance market. The group has played a major role in creating employment for a large number of professionals, marketing executives and administrative staff.
A great admirer of Warren Buffet and Bill gates, RT is influenced by their high philinthorophy and spends lot of his personal wealth for education and upliftment of downtrodden. He has been urging his 32 group CEOs to earmark a significant portion of their personal wealth for the social cause. I wish RT sir long years of service to our mother land and investor community.
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