Godrej Ind to expand interest in financial services via Godrej Capital

Godrej Capital is looking at building a balance sheet of Rs 30,000 cr in the next 4 years

Godrej Capital, which was launched on Monday, will be the holding entity of both Godrej Finance and Godrej Housing Finance.

Godrej Industries will significantly expand interests in the financial services business by foraying into affordable housing finance and unsecured loans via Godrej Capital. Godrej Industries has already ventured into the mortgage loans and loan against property (LAP) space through Godrej Housing Finance.

Godrej Capital is looking to build a balance sheet of Rs 30,000 crore in the next four years, which is currently at Rs 1,800 crore, comprising Rs 1,400 crore worth of housing loans and Rs 400 crore of LAP. 

To build a balance sheet of Rs 30,000 crore, the company will need capital to the tune of Rs 5,000 crore. 

Initially, Godrej Industries will pump in Rs 1,500 crore as capital into Godrej Capital by the month end. This will see the company through the next one year.

For the remaining Rs 3,500 crore of capital, Godrej Industries will take a call if there is a requirement to bring in a strategic partner or fund it internally, Manish Shah, managing director (MD) and chief executive officer (CEO), Godrej Capital, told Business Standard.

Currently, it has footprints across Mumbai, Bengaluru, Delhi NCR, Ahmedabad and Pune and will soon be operational in six new cities. It will keep on adding new geographies each year. It will aim to deepen partner relationships. In addition, it will look at different customer segments and businesses.

“We started off with prime housing and we added LAP six months ago. Affordable housing is the next thing for us to look at, and then unsecured lending. So, geographic growth, deepening via channels and partners, and product offering growth — these things put together, we are confident that in 3-4 years, we see this opportunity playing up,” Shah said.

“If there are other opportunities such as inorganic ones, not in the form of us buying other companies, but in the area of co-lending and co-origination, we think there is a good opportunity in this space for us to look at,” he added.

When it comes to unsecured lending, the company is on the look out for clear opportunities where it can come in and add value in segments which are either underserved or inadequately served.

“Unsecured loans are something that we want to look at six months down the line, not now. We are starting to get some resources together to study this thoroughly and then look at opportunities and pilot it in some places like the group’s ecosystem,” Shah said.

The company is, however, not looking at consumer finance at this point in time as it does not see an opportunity in that space. This segment is currently dominated by Bajaj Finance. 

Godrej Industries has been holding a non-banking financial company (NBFC) licence since 1998 but has not been active in the lending space. It only entered the housing finance space in late 2020.

“With the benefit of hindsight, we should have moved on this opportunity more quickly. I certainly think that it is a big one,” said Pirojsha Godrej, chairman, Godrej Capital. 

“As a group, we had a lot of different businesses that we were focusing on. Over the last few years, we have been more focused, as a group, on streamlining our presence and making sure that the business spaces we are in, we have leadership or a very strong position. I think that effort has resulted in very strong results in businesses like consumer products, real estate, agri business,” he said.