Ad Here  
Indian GST – Between extremes… PC please be our Santa They add lustre to Padma Awards Welcome Measures. Work for 10X Change You too T M Krishna? After all, customer is the king Little surplus after salaries, subsidies and debt servicing Ganesh’s mantras An eco-friendly commute in Mysuru TN - so much to offer... Focus on agriculture and human resources A gratifying record INDIA keeps its date with destiny The Great Fall A Fine division of responsibilities No groundnuts in groundnut oil! Wanted: decentralised financial system A tale of two Bihar babus Sardar Sarovar – the seventy year itch 1800 parties registered with EC – Less than 60 contest elections A historic indirect tax reform Reform this licence to…kill A dual GST that will protect prosperous states Miles to go... The deluge and the several kindly souls When the examiner cheated... South India’s 100 most valuable companies Breaking news or breaking credibility? Kudos to GIM organisers... Two welcome measures from the chief minister... Babes In the wood-RBI North block has little clue to curb inflation Cleansing Indian retail CSR, tech revolution and bank crisis Make way for Make in India... Low profile moves Babes In the wood-RBI North block has little clue to curb inflation Policy Makers Skewed Economic Zones? Why throw baby with bath water? Pool energy prices Focus on southern TN... Need plan over the long term planning What the big B should offer? Strategic planning the missing link Outward ho BJP can now hasten its thrust for reforms Welcome rains for damaged roads... Well-administered State In the horns of a dilemma Oh my GOLD Weaving wealth of western Tamil Nadu Technology and economic development should be linked How will it PAN OUT Sowing seeds of hope MS Installed Star of the South Healthy finances of the Chennai Corporation Rail-road Rajaraman An eventful week with VVIPs of Delhi Land, land everywhere, but... Industry can’t get it from Mars, yet Economy through the month Why (not) abolish? Tax evaders’ get out of Jail-Free Card Chennai Airport-Ready for a rapid take off... Truce at Kasturi Buildings If not Tamil Nadu, where else? Tryst with GST Much ado about nothing Trail-blazing Tamil Nadu Sustainably developing manufacturing sector… Welcome move to widen the tax net… Better relations with UK... Public investments and welfare will surge Research for survival... It’s raining funds for states. Really? Jobs - Lost, Changed or Gained Deming awardees galore! CAD and the emergency thereof A blueprint for the future Need for radical RBI reform Much can be done by us
Star of the South
Shriram Transport Finance Corporation (STFC), part of the Shriram Capital Ltd, is the most shining example of the evolution of a finance services company.

R Thyagarajan (RT), Founder - Chairman, pointed to the environment in Tamil Nadu as favourable to financial services: “the state has witnessed the evolution and growth of regional banks – Bank of Madura, City Union Bank, Karur Vysya Bank, Lakshmi Vilas Bank and the Tamil Nadu Mercantile Bank. These evolved as strong commercial banks effectively meeting the credit requirements of a large number of local businesses. These banks mobilised the savings of the community around and employed these profitably to meet a variety of needs of large number of enterprises spread around the banks’ operational areas.”.  

The culture of saving and investment also helped in the evolution of non-banking financial institutions. RT pointed to Sundaram Finance emerging as a pioneer in this area that extended finances to a large number of customers not effectively serviced by banks. The strengths of the TVS Group in road transport operations both, for passengers and freight that extended to vehicle distribution, bodybuilding, tyre retreading and spare parts, helped in a logical expansion into vehicle financing.


Changing fortunes

“This success was quickly followed by Sakthi Finance and Shriram Finance. During the 1980s and 1990s, these finance companies helped thousands of individuals to emerge as entrepreneurs owning trucks and other small enterprises. For a couple of decades, every business house diversified into financial services! The state also saw the emergence of leasing companies – First Leasing Co and India Equipment Leasing.”

The going appeared good until the 1990s when the Reserve Bank tightened regulation over NBFCs. RT compared this to the carpet-bombing of Vietnam! “With great enthusiasm RBI heavily tightened the regulation and, combined with fiscal measures from the government, this resulted in the closure of a large number of finance companies.. Not just the bathwater, the baby and his parents were also thrown out,” said a bemused RT.

At STFC, innovations flowed in continuous stream and helped the company surge. Tie-ups with banks helped tap their huge resources. This single factor refined through several innovative measures took the company to great heights.

The company made excellent use of a booming global economic environment. From 2004 there was massive interest on the part of FIIs to invest in India. The result: STFC reaching unprecedented and newer heights in expanding assets under management.

The Shriram Group historically was best known for the Chit funds business. Shriram Chits handles even today around Rs. 1800 crore of business providing a source for small and medium businesses and the middle class access funds in times of need. RT said that with the increase in cost and tougher norms,  this business is losing its attraction.


Opportunities to leverage STFC’s strengths

Sometime in 1999 STFC tied up with Citicorp for commercial vehicles financing under portfolio management services. Another major break came in 2005 when STFC accessed investment from ChrysCapital and the next year from the US private equity TPG. Yet another innovation was the issue of non-convertible debentures to domestic investors.

Just in a decade of the first such transaction with ChrysCapital in 2004, there has been an expansive growth. Sanlam Insurance of South Africa with which the Shriram group tied up for setting up Shriram Life Insurance Co and Shriram General Insurance Co, found in Shriram group a partner with great potential. Shriram Capital Ltd was set up as the holding company for STFC, Shriram City Union Finance, the insurance and other financial services companies.

Looking ahead, RT believes the past cannot be the pattern and guarantor of growth for future.  The search for a stronger strategic partner to accelerate growth lead him to Ajay Piramal as a natural partner. In 2013-14, Piramal invested Rs.4556 crore in the Shriram Group.

RT is confident  that of these two strong partners will help expand Shriram operations and visibility across India.

Author :
Reported On :
Sector :
Shoulder :
IE, the business magazine from south was launched in 1968 and pioneered business journalism in south. Through the 45 years IE has been focusing on well-presented and well-researched articles. When giants in the industry stumbled to keep pace with the digital revolution, IE stayed affixed embracing technology.
Read more
Economist Communications Ltd is committed to ensuring that your privacy is protected.
Read more
You agree that your use of this Website and the purchase of the magazine will be governed by these terms and conditions.
Read more
S-15, Industrial Estate,
Chennai - 600 032.
PHONE: +91 44 22501236