THE ECONOMICS OF WHAT SHRIRAM DOESN'T WANT TO DO

AND WHAT IT WANTS? TO DOUBLE ITS AUM IN THE NEXT FIVE YEARS THROUGH CROSS-SELLING AND A CONTINUED SEMI-URBAN AND RURAL FOCUS.

- NEVIN JOHN

YEARS BACK, in a meeting with Shriram Group founder Ramamurthy Thyagarajan, Y.S. Chakravarti, then a rising star, said his business was growing rapidly and would double in a year. Thyagarajan, who had stepped down from an active role, dampened Chakravarti’s enthusiasm: “Anything that grows too quickly is often considered a weed, not plant.”

Since then, Chakravarti, 61, who was later appointed MD and CEO of Shriram Finance Ltd. (SFL), the flagship created following the merger of Shriram City Union Finance and Shriram Capital with Shriram Transport Finance in December 2022, has never chased abnormal growth. He has a modest target—a 15% annual growth in AUM or assets under management that will double the AUM to ₹5.12 lakh crore over the next five years.

Chakravarti says, “We are not pursuing aggressive growth rates of 30-40%. The focus is on sustainable and manageable expansion.”

Umesh Revankar, vice chairman, says SFL has out-performed the guidance it issued on all parameters.

For one, against a 15% AUM growth guidance after the merger, it delivered 20% in the first two years. “We gave a net interest margin target of 8.5%. We are at 8.8% now. We gave a guidance of 2.5% on credit cost but achieved a moderate 2%,” says Revankar.

SFL's consolidated profit jumped nearly 30% to ₹7,398.89 crore in FY24 following the merger. The profit of the first three quarters of FY25 added up to ₹7,432.55 crore, more than the full FY24’s figure.

The merger allowed SFL to distribute the products that were sold separately earlier. Before the merger, gold and SME loans were offered only in the 500-600 branches of Shriram City Union Finance. Now, all the 1,000-plus branches, including those in transport lending, offer gold and SME loans.