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The 3 Loves of RT
R Thyagarajan (RT) was a year senior to me in the hallowed precincts of the famous Vivekananda College. I have had fleeting glimpses of the lanky, dhoti-clad undergrad in the crowded classes of some of our renowned math professors. We pursued our post-graduation in Mathematics because the two of us had an instinctive fascination for figures; I mean numbers. That’s where our similarities end. RT went to work for an insurance company and then metamorphosed into a businessman extraordinary. That was natural, given his incredible vision and his relentless drive towards it. I taught for a couple of years at the Madras Christian College before taking the plunge into journalism.

In the years that I have known him, RT continues to be the humble giant that he always was, and wears  success gently on his sleeves.  Let the numbers do the talking. His business empire has:

•    A client base of 7.5 million,

•    Assets under management exceeding Rs 100,000 crore,  

•    Number of employees upwards of 35,000  

•    A continuous record of profits and growth,

•    Created entrepreneurs in thousands.

The man has several affable qualities: an unusual disposition to appreciate failures in businesses, the ability to underwrite losses suffered by friends, and a willingness to happily participate in venture capital initiatives.  All these and much more such traits belong to R Thyagarajan, founder of the sprawling Shriram Group that today spans multiple businesses and geographies.

As one reporting on the economy and business for five decades, I have been writing on southern corporates: documenting the meteoric rise of some, the equally precipitous fall of a few, and the steady growth of others.  I have seen, at close quarters, entrepreneurship at its very best.  Several companies have made a name for themselves regarding either one of quality, or efficiency, or profitability, or all three rolled into one. But when it comes to size and scale comparable to western India and the NCR, the South has not spawned giants. More so in the domain of financial services. RT’s genius lies in mobilising resources in massive volumes, keeping costs on a leash and getting good men to do great work.  These have helped his empire leapfrog to being the biggest name in the South. With an asset under management upwards of 1 lakh crore! Phew.

But we are getting ahead of the story.

A mathematician at heart

RT’s first love has been mathematics.  Even today, the big boss of financial services, is in love with the subject. His grounding in math and his fascination for numbers saw him take the flight to Calcutta to pursue in statistics at the Indian Statistical Institute (ISI). He frequently refers to the genius of P C Mahalanobis and his contemporaries at ISI for their focus on analytics.  In his biography, RT talks about his first air travel that was plain terrifying and how even today he has not gotten over the phobia.

Thyagarajan regularly speaks about India’s historical advantage when it comes to math. Home to several famous mathematicians, “We Indians are naturally inclined to excel in it.” He points to the modest investment that is required to teach the subject and the prospects of producing quality scholars at least cost.  He is right.  As he says, “Mathematics, unlike physics, chemistry, or biology, doesn’t require expensive laboratories.  Also, we have a tradition and history for analytical thinking.”  Little wonder, he poured his personal money into the Chennai Mathematical Institute (CMI) and facilitated its development into a world-class institution for teaching and research in mathematics. After all, mathematics is the base for analytics, computer sciences and theoretical physics. He and members of his family have contributed private money to the tune of Rs 15 crore. More importantly, he has been working towards creating a corpus of Rs 100 crore for the CMI by calling up friends and fellow entrepreneurs to be liberal with their money.    

But when the history of 21st century India is written RT will be remembered not just for his contribution to mathematics but also for his ability to build a business empire of great size and reputation. In the big and impressive list of entrepreneurs and business leaders who set up industrial empires, RT has carved a distinct space for himself. He had come a long way from the time he was a professional manager when he worked first for the New India Assurance Company and later the renowned insurance brokers

J B Boda & Co Private Ltd. He cut his teeth in this business, working with brilliant leaders in that field: men like B K Shah, M V N Shetty, J B Boda and P J Mathai. These nurtured his second great love: Insurance.

Here in about, the seeds for financial services were firmly and deeply sown.  It couldn't have been otherwise, given RT's rich exposure. In his biography, RT says with characteristic candor: “You don’t become an entrepreneur knowing how to evaluate risk. I’ve been able to assess the risks in money lending quite well, maybe with a certain amount of acumen. I’ve done it. I’ll continue to do it because I’m good at it. That does not make me an entrepreneur. That just helps me make money in money lending. Using that money, we have created some enterprises.”

For sure, he is humble and he wears humility on his sleeve. The ability to mobilise resources and employ these profitably, lending to productive enterprises backed by his yen for risk taking and risk appraisal contributed to the astounding success of Shriram Chits and Shriram Transport Finance Company (STFC).  These companies were the foundation of the Shriram Group.  For many years, the public knew the group only through the prism of these two entities. In developing these, RT’s signature quality came into play: of spotting talent among young men and women, and grooming them into leaders, liberally entrusting them with responsibility.

I remember the tough times for non-banking finance companies (NBFCs) post the 1991 liberalisation. Around that time there were hundreds of them in Chennai itself. The rules of the Reserve Bank of India dramatically changed the norms for accepting public deposits. With that, the bottom fell off these NBFCs. Most of them folded up. But not Shriram Transport. RT worked his way up by raising alternative sources of money. Banks were awash with funds and were keen to expand lending for retail businesses. But they lacked the skill to lend to thousands of small retail businesses and recover the loan with profit.

Big banks like ICICI and HDFC offered attractive terms for financing new commercial vehicles that impacted severely on vehicle financing by private players. The large clientele and the demand for pre-owned commercial vehicles were not familiar territories for banks. But these have been a well-developed and profitable business for STFC. RT and his team sold large portfolios under its management to Citicorp, Bank of India, ICICI Bank and UTI Bank (now Axis Bank). This sale resulted in a massive growth in assets under management by STFC. It also attracted large private investing companies in Europe and EU to invest impressive amounts in STFC.

Simultaneously, the company refined the techniques for sourcing used vehicles and for lending these over a rapidly expanding geographical spread. The expertise of STFC in assessing risks and lending to an ambitious, new generation of truck drivers to turn into truck entrepreneurs provided an ever-expanding clientele. Courtesy information technology, auto-malls were opened to expand the range of services. Credit card facilities were liberally given to enable the clients to buy fuel and tyres and to meet other operating expenses. There was a great and continuing interest on the part of the truck entrepreneurs to upgrade the stock of vehicles. Thus custom grew and grew.

Recalling this, well-known chartered accountant and BJP ideologue, S Gurumurthy, says, “When the NBFC industry was in terminal crisis in 1998, RT realised that no one, however big, could survive so long as the reputation of the industry was bad. He quickly understood that no individual company’s brand could bring respect to the industry as a whole. He undertook the task of repairing the poor brand of the industry by roping in the consumers of the industry to explain the hugely important role played by the NBFCs to the authorities to re-brand the entire industry back to acceptable levels. His strategy worked. He footed the bill for the industry’s benefit.  Every one benefitted.”  Ever since, RT became the unquestioned intellectual leader of the industry.

Infact, in RT,  Gurumurthy, found a kindred soul in advocating the contribution of SMEs. RT has been pursuing an active campaign for special treatment to this sector. Thus when the finance minister announced the formation of the Mudra Bank, RT was all magizchi. RT believes that the RBI has enough on its plate. Regulating the large formal commercial banking sector and attending to significant concerns on monetary policy are full time jobs. It was time the regulation of NBFCs moved out of the RBI’s domain. Little wonder, when Mudra Bank came about, RT felt the government had finally heard his voice.

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