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April 30, 2024

Shriram Group Nears Partnership Deals for Wealth Management Venture

Shriram Group, a Chennai-based conglomerate, is on the verge of expanding its portfolio into the wealth management business through strategic partnerships. According to Umesh Revankar, the executive vice-chairman of Shriram Finance, the group is currently engaged in active discussions with two companies to finalize these partnerships by June this year.

The wealth management venture will be operated through Shriram Credit, a subsidiary of Shriram Capital. Revankar revealed that one of the potential partners is a global major, while the other is a domestic firm. This move follows the group’s announcement in November last year to enter into both asset reconstruction (ARC) and wealth management businesses.

Despite these expansions, Shriram Finance anticipates modest single-digit growth in vehicle sales for the current financial year. Revankar attributes this to a slowdown during the election season, particularly affecting the demand for commercial vehicles. He expects a slower start due to government machinery involvement in the electoral process during the initial two months, with sales possibly reaching only around 60 percent of March figures.

In March 2024, the Indian Auto Retail sector experienced a 3.14 percent growth compared to the previous year, with passenger vehicles (PV) and commercial vehicles (CV) facing a decline of 6 percent each. However, Shriram Group maintains its projection of a 15 percent growth in assets under management (AUM) for the fiscal year.

As of March, the company’s total AUM increased by 21.10 percent, reaching Rs 2.25 trillion compared to Rs 1.85 trillion in March 2023 and Rs 2.14 trillion in December 2023. Revankar expressed confidence in achieving this growth despite the slower start due to elections, with expectations of reaching around 15 percent growth by year-end, unaffected by collections.

Revankar also highlighted the company’s expectations for growth in segments such as passenger vehicles, two-wheelers, gold, and SMEs during the current fiscal year. Despite a 57 percent rise in consolidated net profit during the fourth quarter of the financial year 2023-24, reaching Rs 2,021.28 crore compared to Rs 1,288.18 crore recorded in the same period of the previous year, the company anticipates slower lending in the construction segment due to the elections.

“For construction, we will be slower because of the elections. Not that we are worried about results, but repayment will be slow as the government machinery will be involved in elections,” Revankar stated.

In conclusion, Shriram Group’s imminent entry into the wealth management sector marks a significant step in its expansion strategy, with partnerships on the horizon to propel its growth trajectory amidst the challenges posed by the current economic and political landscape.

Jhumpa Lahiri

Jhumpa Lahiri

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