“The business was built on equity and public deposits” 

It’s just after 3 pm when TT Srinivasaraghavan (TTS) leads us to the terrace of the Sundaram Finance HQ, just off one of Chennai’s main arteries, Anna Salai. A table and chairs are laid out in the shade for our conversation. There’s a gentle breeze blowing; a couple of kites, wings still, are soaring effortlessly while a large India flag is fluttering atop the TN state Congress HQ. February is one of the rare months in Chennai when one can sit on a terrace mid-afternoon, says TTS, pointing out the famed MA Chidambaram stadium, where a battling Indian cricket team bested England in a Test recently. 

On March 31, the sixty-six-year-old Managing Director of Sundaram Finance (SFL) will retire after 37 years in the company, 18 of them as the MD.  According to old timers, Sundaram Finance is as much a part of Madras ethos as filter coffee is. And, trust plays a very big role in making SFL what it is. “One of the early lessons I learnt when I joined SFL,” says TTS, “is first and foremost is that we are custodians of public trust. With great trust comes great responsibility. We are very mindful of that.”

Steeped in Trust  

Trust and safety is the Sundaram promise to its thousands of depositors. “In everything that we do and say we are conscious of that. This business was built almost entirely on equity and public deposits. Our founder chairman, TS Santhanam, had a soft corner for depositors. In later years, he would not immediately buy the idea of a reduction in deposit rates. He had gratitude for depositors as he felt they built this company,” explains TTS, as we settle down to talk. 

Steeped in that trust, TTS leaves behind a robust SFL. From the time he was anointed the deputy managing director in 1998, disbursements have grown from Rs 817 crore in FY 1998-99 to Rs 15,175 crore in 2019-20, while public deposits have burgeoned from Rs 550 crore to Rs 3,676 crore in this period. Net profit stands at Rs 724 crore from Rs 63.31 crore in ’98-99. Helming SFL for so many years, TTS has seen it all, the various crises that impacted industry over the years and, in turn, SFL. 

The Covid-19 crisis is the latest that SFL has had to weather. Yet, the disbursements in October 2020 was the highest ever in SFL’s history and in the nine months ended December 31, 2020, disbursements growth was 11 per cent year on year. “That is far more significant because that takes the highs and lows as well as the three months of lockdown of the first quarter. I am not a fan of quarterly results,” he emphasises. 

A bearer comes up silently and places small bowls of cashew and  kesar  rolls on the table. The paper napkins fly away in the breeze, which is stronger now, and he goes chasing after them. As I reach for the cashew, I ask TTS how SFL got through the worst of the pandemic. “We have managed our portfolio better than expected during the pandemic. We did the (interest) moratorium as mandated. In Q3, we also did a restructuring of around 2.5 per cent of our books. Gross NPLs (non performing loans) under 2.5 per cent is best in class;  I would still like it to be back at 1.5 per cent,” he says. 

TTS says Santhanam always said that the small truck operators, who form bulk of the SFL disbursements portfolio, need them the most in rough times. “Don’t be a fair-weather friend. That has been our abiding philosophy.” 

Growth Mantra  

Construction equipment, tractors and cars have done reasonably well for SFL the past quarter. TTS says the company’s mantra is GQP (growth, quality, profitability). “It will take another six months for some of the segments to come back. There are years when not growing was the best thing you could do for your business. For example, this year we are not going to grow. Even next year, measured growth is what is called for rather than euphoric growth. Prudence continues to be the watchword,” he explains. 

Despite TTS’ long years in SFL, he didn’t set out for a career in finance. After his B.Com from Vivekananda College in Chennai and an MBA from University of Pennsylvania, he started his career as a banker at Grindlays Bank in October 1977, posted in Kolkata. It was an extremely British bank, the  burra sahebs  were still around and the customers were all the Kolkata-based MNCs. “But, I soon enough found out that I was not cut out for this type of banking. I did learn a lot in terms of basic banking in the 18 months, and made lots of good friends. Calcutta then was lovely and vibrant and there was something magical about the city,” he says with a hint of nostalgia. 

But after a short stint in Mumbai, thereafter, he quit and jumped on a train and returned to then Madras. His father was aghast. Grindlays was considered one of the top five jobs in the country and he had just walked away. Confusion assailed the young TTS on what to do with his life. His brother was an academic at IIT Madras and he suddenly had this great longing to become a school teacher. 

However, family pressure prevailed and he set out to do his CA, following in the footsteps of his father. However, after 18 months of the grind, he dropped out of his articleship. It was just at that time that there was an ad by the Banking Services Recruitment Board. “Between CA and banking, I felt the latter was better,” he says with a big grin. He got through the test and joined Indian Overseas Bank’s Mount Road branch as a probationary officer, his second stint in a bank. After six months, he was posted at Delhi and then six months later he was back in Madras to work in the economic and planning department at the Central office. “I got married when I was in IOB and it looked like I was going to be a banker.” 

Till he saw another ad, for a job in equipment leasing. After a first interview by AF Ferguson, in the second round he found out it was Sundaram Finance. He walked in to find GK Raman, who would be MD later at SFL, on that interview panel. Raman knew TTS as a kid, but had not met him for many years. “He said I had the right experience and that the company was getting into an exciting segment. I joined SFL as a deputy manager in February 1983,” he adds. 

Learning the leasing business  

Equipment Leasing was very nascent at that time. IFC Washington was pioneering leasing in all of the developing world. In India, it wanted to set up four regional companies with SFL in the South. The pattern was that the Indian partner would have a majority, IFC Washington around 25 per cent and an Indian bank the balance. For SFL, the partner was SBI. 

However, getting approvals from the RBI was time consuming. In the meanwhile, SFL was learning the leasing business. Selling the concept to customers was exciting but the procedural process took long and it dragged on through 1983 and into ’84. By the time the approval came in 1985, SFL had already been in leasing for three years and the business had gathered momentum. While India Equipment Leasing took off in 1986, TTS stayed back and continued with the leasing division at SFL for 12 years. 

In January 1995, TTS quit SFL and went to work with GE Capital, Delhi, once again for 18 months. “It was a great learning experience working in the world’s largest NBFC as the head of the commercial equipment financing business,” recalls TTS. Till Raman’s booming voice on the phone one morning asked  “eppo thirumbi varai?”  , (when are you returning?). “He said there was nothing to think and asked me to get on a plane and come back.” 

In August 1996, TTS rejoined SFL in mainstream lending. As luck would have it, within a year of his joining, CRB Capital Markets crashed and there was stringent regulation for NBFCs. And, then there was also the Asian financial crisis. “It was baptism by fire,” recalls TTS. 

Anointed successor   

It was during this phase in 1997 that Raman declared that TTS would be his successor. In February 1998, he was elevated to the Board as the Deputy MD and GKR started grooming him. “For five years, literally, I was his shadow. He would introduce me to bankers, dealers and customers as his successor.” 

TTS says that he had the best education in finance from Santhanam and Raman, but who both passed away not long after he took over the reins as the MD in 2003. “However, what I have experienced over the past 15 years as captain of Team Sundaram is the calm and measured hand of our Chairman, S. Viji, who placed  enormous trust and confidence in me,” says TTS. 

By now, we have polished off all that’s there of the cashew and the  kesar  rolls, the taste lingering on. We’re served filter coffee, which is among the best I have tasted. Switching tracks, I ask TTS to reflect on the NBFC industry over the decades. 

TTS says in the 1980s, all the credit needs of the unbanked was only met by hire purchase companies as banks were not in this space. “The HP companies were the ones who wrote the book on financial inclusion. If the small truck owner was an honest guy and if he drove a 15-year-old truck, we lent to him. If you have such a vibrant trucking industry today and the financial eco-system to support that industry, the HP companies should really be owed a huge amount of debt.” 

Unfortunately, as he recalls, as things evolved, NBFC literally became a four letter word. “There has been a general mistrust and negativity towards NBFCs. To be fair, in the last 12 months, the Government has certainly taken a number of steps to promote and protect NBFCs. They have seen the role that NBFCs play. They have been very supportive. So has the RBI,” explains TTS. 

Shadow bank, as they say in the West, is the most despicable term used to describe NBFCs, he grimaces. This segment should be looked at as a uniquely Indian organism. “If you can build a pipe with banks at one end and the smallest MFIs at the other end, NBFCs can be in between. Banks can lend to us and we to some of the smaller NBFCs. This can have a cascading effect. Banks have the ability to raise resources while NBFCs have the ability to source business. Is there some way to logically build that chain? There has to be a path to do this,” suggests TTS. Regulatory shift, competition and formalisation of credit data were the three significant shifts in the NBFC space, he says. 

By now we have been conversing for over an hour and the evening is getting more pleasant. I ask him what’s next on his retirement agenda. While he will continue to be associated with SFL in a non executive capacity, he hopes to have time to pursue his hobby as an amateur wildlife photographer and update his blog. “I used to do a little bit of poetry writing in my younger days. I could take a crack at that if the juices flow again.”