Piramal's exit will not impact Shriram Group companies: R Thyagarajan

Shriram Group is not driven by one individual; every company has its own management and is run by their respective CEOs, says Thyagarajan

Billionaire Ajay Piramal, who started selling Piramal Enterprises’ entire stake in Shriram Transport Finance, is in the process to exit Shriram City Union and Shriram Capital. Piramal, who invested Rs 4,583 crore in the group companies, was seen as successor of R Thyagarajan, founder of Shriram Group. Thyagarajan tells T E Narasimhan Piramal’s exit may not have an impact on group companies. Edited excerpts:

How Piramal’s exit will affect the Group? 

PEL’s exit was not a hurried or panic exit. It is a strategic exit. Piramal is an investor and like any other investor, he, too, would have seen better investment opportunity outside Shriram. So, he wants to put the money on that. 

We knew from Day One, as an investor, he would exit. Since its inception, Shriram Group is not driven by an individual. Every company got its own management and run by respective chief executive officers (CEOs). I acted only as consultant and they are not bound by my consultancy. The actions have been directed by a team of CEOs. Piramal’s exit will not matter much to the enterprise, at least, not in the short run. 

This culture of this organisation has settled. It is unlikely to undergo any change whether R T (R Thyagarajan) is alive or dead. The succession plan of the company took place 15 years ago when we successfully created a management culture. Our management culture is more like the Tatas. I do not want to give credit to individual; it is a collective work. 

Have you or Shriram Ownership Trust thought of buying back shares from Piramal?

We do not have any intention of increasing stake in any of the companies and we do not have that much of bandwidth also.

Many private equities have invested in the Group. Why no one joined?

We have not thought of it. We do not have the motive to increase or decrease the stake. Piramal knows how to find a buyer. We have welcomed people like Ajay Piramal, who could bring in some strength to the organisation. Piramal’s approach and business philosophy have gelled well with our philosophy. 

What are the key contributions of Piramal, especially, after he took over as chairman?

The key thing is that he did not disturb the system by interfering in running the organisation and he approved of whatever we did and presented to him.

What is the status of the merger (merging STFC and SCUF would mean listing the holding firm Shriram Capital)?

Merger is a priority, but we do not have any time frame because it is all based on regulatory approvals, which usually takes time. Besides, it is important to convince investors and employees.

Yesterday (Wednesday), HDFC acquired majority stake in Apollo Munich Health. Will Shriram insurance companies look for any such opportunity?

Why should we take somebody’s problem on our shoulders? Our general insurance business clocked a profit of over Rs 1,000 crore on an equity base of Rs 260 crore and life insurance business posted a profit of Rs 200 crore last year. Today, the major problem in the insurance industry is suicidal competition and we do not want to enter into this.

Why Shriram is not floating separate health insurance?

Currently, the major problem is lack of information to take right decision on premium rate. By the time we start the company, collect data and device premium, we will start posting losses and it will be difficult to turn around. Besides, as health cost is going up by 15-20 per cent year on year, it will push the insurance cost and people may not be interested.