Spreading wealth

Nitya Varadarajan        Print Edition: September 20, 2009

Shriram Group creates wealth by...
Lending to over 6 lakh truck owners. One in five trucks on Indian roads is funded by the group.
Managing chit funds worth Rs 3,500 crore every year across South India.
Providing consumer finance to over five lakh customers, especially SMEs.
Offering life and general insurance cover to over 3 lakh people.
Undertaking turnkey engineering projects in the fields of energy, waste water pipelines etc.
Building residential and commercial properties, including SEZs.
Developing software products in life sciences and production-supply chain management verticals.
 
...And promotes entrepreneurship
Outside the group by:
Funding entrepreneurs directly and through the Rs 100-crore TVS-Shriram Growth Fund.
Helping people below poverty line, especially women, start their business through microfinance.
Within the group by:
Sharing the promoter’s wealth with the top managers and thus making them partners.

S. Abhaya Kumar, Vice Chairman, LifeCell International (56), was both excited and worried. He was excited because TRIcell, a company that he recently floated to do clinical research and trials on the therapeutic usage of stem cells, was an excellent business proposition. But with the world just about getting to know about stem cell research and the typical long drawn process of clinical researches, funding the project was proving to be difficult.

He approached the Shriram Group, whose Founder-Chairman R. Thyagarajan readily agreed to take 20 per cent stake and fund Rs 7 crore. “As a partner, the Shriram Group never interferes in the running of the organisation. It offers valuable inputs on regulations, taxes, governance and on anything we ask,” Kumar says. Manipal Accunova, a contract research organisation and a leading player in biotechnology and the clinical structure space, also has a similar story to tell.

Interestingly, the Chennai-based Shriram Group, which has seen its profits (excluding closely-held firms) surge from just Rs 83 crore in 2004-05 to Rs 834 crore in 2008-09 (a compounded annual growth rate of 78 per cent) with revenues of Rs 7,390 crore (2008-09) and assets worth Rs 38,500 crore under management, is neither a venture capitalist nor a project finance company. Bulk of its revenues (Rs 6,034 crore) come from financial services—truck finance (it funds one in every five trucks that run on Indian roads), consumer loans, chit funds and the insurance business. It also operates in the IT, realty and engineering sectors.

“We believe in encouraging enterprise and entrepreneurship,” explains Thyagarajan in a very simplistic way. In fact, creating entrepreneurs is a passion for him—something he has done for years. What is interesting is that now he has put in place a formal structure to foster entrepreneurship not only outside but also within the group.

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