There is nothing called ‘too big to fail’, says YS Chakravarti, MD & CEO, Shriram Finance

Our commercial vehicle business should grow between 10–12 per cent and retail growth should be 18–20 per cent. On a combined book, we will grow 14-15 per cent. Higher growth would be driven by small business finance and personal loans, which has the potential to double in size. It’s 3 per cent of the total book now. In the SME segment we can grow about 30 per cent, personal loan book growth could be 50-70 per cent whereas two-wheeler book may grow only by 10 per cent because it is determined by the sales at dealer points.

Reskilling is an ongoing process. 40,000 employees have access to our app either for loan origination or collection. On the origination side, the employees can log on to the app where there are a few basic questions and papers which need to be obtained. It’s done digitally and this information is uploaded into a lead tracker. We operate in the hub-and-spoke model where the spokes generate leads and the hub does the credit. We have five GU (geographical unit) heads and under them there are vertical heads, and their job is to build and train teams. As long as we have a strong credit team, lead generation can be done by a basic training week. Reskilling has become easier than what we had thought.

Cross selling is just another opportunity. It’s about going into newer cities where Shriram City Union Finance (SCUF) is not present. So, you’re not just selling it to your customer, but selling it into the entirely new market. Among products, its gold loan. It’s an easier product; every trucker needs it.

It could, definitely. There is nothing called ‘too big to fail’. But how do we mitigate this? Today we have five GU heads. These guys work like they are running 5 companies. Each company is about ₹30,000 crore of business. If that GU becomes too big, then we will have one more person running it along. The idea is that each of them have the responsibility to run a product or a geography like their own P&L. If everything is run centrally, I agree that’s dangerous. But we have been empowering people for the last 30-40 years. This has helped us grow.

On the compliance side, we are better than a bank today because of IND-AS reporting. Operationally it is not going to be easy — starting from wage structure to peoples’ and employees’ expectations, everything changes. Your services become more expensive. You will not be able to get the advantage until CASA is built, and building CASA is also not easy today. Secondly, how do I raise liabilities; I have ₹70,000–80,000 crore of bank borrowing. My concern today is –how much liability can I keep raising from the market? The banks may hit their ceiling, market may also hit a ceiling, though it’s a long way off. We have to become a ₹5-lakh crore company before we think about it (bank licence).

Piramal has indicated they want to exit, they made a public statement. TPG has been with us for ages, so they need an exit. Apax has not expressed its intention to exit. There are private equity investors showing interest in us. They are asking (us) some questions, looking at the portfolio and studying the way we do business. We’ve never had an issue with any bulk investor taking stake and if it’s a bulk shareholder, we’ll give him a little more respect like a board seat.

It’s 8.5 per cent now. Rating agencies typically take six months to a year before they look at you. They must see at least 3 – 4 quarters of the combined entity’s performance before a re-rating.