Zone heads to staff drill: Shriram rolls merger ball
Appoints PWC to advise on post-merger integration
From bringing experts in charge of five zones to training employees to give exposure to products, Shriram Group has kicked off the integration process on ground, ahead of its planned mega merger.
The company has already appointed five joint managing directors (JMDS) and started 50 pilot branches so far to have a look at how the merged entity between Shriram City Union Finance (SCUFL) and Shriram Transport Finance Company (STFC) will function.
The group has appointed Pricewaterhousecoopers to advise on the post-merger integration process.
“Integration process is going on smoothly. We have started the pilot. Through a few pilot branches, we will do multiple product launches. We have five geographical areas and their leadership in place. They will be overseeing, starting from pilot study to implementation,” said Umesh Revankar, vice-chairman and managing director, STFC.
Other processes like human resources, system and financial integration are also on track. “By the time the legal date (of merger) is on, we should be totally integrated,” he added.
The five new JMDS are K Srinivas and Gouse Mohiddin Jilani from SCUFL and Nilesh Odedara, Sudarshan B Holla, and Sridharan P from STFC. They have been part of the group for close to 25-30 years.
The planned super-app called Shriram One — where all lending, savings and insurance products will be available on a single platform — is also key to the new integration.
Earlier, it was said that the one-time integration cost for the company would be around ~200 crore. “It is according to schedule. The National Stock Exchange and BSE approvals are in. We have now sent the proposal to the National Company Law Tribunal (NCLT). NCLT will next call a shareholder-creditor meeting. We should be on schedule for October/november first week,” said Revankar.
The company said the system-people integration is in progress. It started staff crosstraining at the branch level to help employees develop expertise in the new products. The strategy is to train all workforce on the diversified portfolio in six months.
STFC and SCUFL work on a structure where each geographical unit is managed end to end by the leadership in that zone — from sales and collection to profitability and growth.
According to the integration road map, a similar successful format will be continued in the new entity Shriram Finance (SFL) under the leadership of five JMDS.
“Each JMD will have his own management, marketing, sales and product teams and will be operated consistent with local customs and demand. On ground, each division might look like a standalone business. However, the overall direction of each division is still directed by the central business policy. India is culturally unique in each geography. This strategy will help us be deeper rooted and have stronger customer connect,” said a source.
The structure came into effect on April 1.
“We have started pilot projects in 50 branches across the country and have launched all products there. The pilots will help us understand market demand and we will tailor our strategy based on each geography,” added the source.
It was in December 2021 that the group announced the merger of Shriram Capital and SCUFL with STFC to create the largest retail non-banking financial company in India — SFL. This merger will bring together all its lending products — commercial vehicle/two-wheeler loans, gold/personal loans, and small enterprise finance.
The new entity will have combined assets under management of over ~1.5 trillion, more than 20 million consumers, and a distribution network of 3,500.