Shriram Group plumbs in its veterans to tackle transition in leadership

Chennai: Shriram Group, which is one of the largest asset backed lenders, is slowly sewing up leadership teams at various companies within the group to manage the transition that will arise out of the exit of its chairman Ajay Piramal from the group.

Billionaire businessman Ajay Piramal has kickstarted his disengagement process with the group with the selling of stakes in Shriram Transport Finance earlier this week. He is expected to offload his holdings in Shriram City Union Finance and also the holding company Shriram Capital, for which he is the chairman too.

“DV Ravi, MD of Shriram Capital, Umesh Revankar, (MD of Shriram Transport Finance) and R Duruvasan (MD of Shriram City Union Finance) will constitute the CEO team for finance business. Already Ravi is holding discussions with bankers and investors on behalf of the promoters,” said R Thyagarajan, founding patriarch of the group. The “CEO Team” will dig in to the expertise of group veterans including Thyagarajan, S Natarajan (one of the promoters of Binny group), T Jayaraman, (who was part of the chit fund business) and R Kannan and few others. There will definitely be no leadership challenges,” Thyagarajan said.

“From 2005 I have not been active with the traditional financial services business of the group. People who are running it now have been running it for 7-8 years. A culture has been established, which cannot be changed overnight. Piramal came and made peripheral changes, not structural changes,” he added. Among the changed thinking within the group is to completely rule out a foray into banking. It has also decided not to implement the findings of global consultant McKinsey, for now. The study was conducted to help the lender improve practices and enhance cross selling opportunities within the existing clientèle of the group.

The group considered a banking foray but an RBI diktat which barred operating both NBFC and bank together forced the group to abort plans. It later tried to merge with IDFC Bank which had to be aborted due to valuation and control issues. “We were premature on the IDFC transaction. We could have sorted things out and then come out with an announcement. It was a mistake,” he said. “We will never attempt banking, ever again,”Thyagarajan said. The group will continue to focus on its existing lines of finance business. As regards, McKinsey Study, “We don’t see any merit in their findings. There were clear issues for us on cross selling products as suggested by them. For now, it is safe and inside a cupboard, nothing beyond,” Thyagarajan added.