Shriram Group waits for NCLT approval of merger, ready for integration

Group conducting trial run at branches, preparing super app for merged entity called Shriram Finance

The merger of Shriram Transport Finance (STFC) and Shriram City Union Finance (SCUF) is expected to get approval from the National Company Law Tribunal (NCLT) on October 19.

The group is preparing the ground to announce the new entity, Shriram Finance, by the second week of November, and is ready with technological and physical integration to start operations. The merger has already been cleared by the Reserve Bank of India, Insurance Regulatory and Development Authority of India, and Securities and Exchange Board of India.

The new entity is expected to have combined assets under management (AUM) of more than Rs 1.5 trillion, some 20 million consumers, and a distribution network of around 3,500. The one-time integration cost was pegged at around Rs 200 crore.

Online training for around 50,000 employees is done and a trial for selling products through lead generation is underway at 1,200 branches, out of the total 2,850. The group will launch the first phase of its super app, ‘Shriram One’, by the end of first quarter of the next financial year.

Early this year, it appointed five joint managing directors (JMD) to handle five geographies or zones for Shriram Finance. PricewaterhouseCoopers is advising the group on the post-merger integration process. The group’s digital arm, Novac Technology Solutions, leads the process of digital integration. Ajay Thomas John, the group’s chief digital officer, said the integration started in January 2022 itself after the group announced the merger in December 2021.

“We have ensured that both applications run on a similar platform. We did a trial run last quarter. We have brought in all our platforms and hardware ecosystem on a similar platform. Only thing is that when it (the date of merger) is announced, we will have to integrate real-time,” said N S Nanda Kishore, director and chief executive officer of Novac Technology Solutions.

The Group conducted online training for around 50,000 employees of the two companies through a system called myCoach. “We did a pilot run of the businesses. We asked our STFC people to act as lead generators for SCUF application. What happens is that they will act as a lead,” Kishore said. Data integration between both companies will happen after a final announcement about the merger.

The super app focused on financial services will help customers in learning about products and get loan clearances faster and with minimal documentation. “The application will include all the products which are there across Shriram Group, including the lending of both STFC and SCUF. We will also be getting into payments as part of the application. We are also exploring partnerships, like for booking of flight and bus tickets, among others. We are also in talks with a couple of players on whether we can provide news to our consumers,” John said.

As the physical trial run is happening only at 1,200 branches, employees will be swapped in the remaining branches after the final announcement. On the day of the merger, officials will be able to access the applications of both companies. “From a tech readiness standpoint, I am looking at creating digital assets for the merged entity. That means getting ready with the Shriram Finance website, which will integrate all the products with STFC and SCUF so that we can bring together the entire gamut of products for any customer,” John said.