‘Looking to list Godrej Capital over the next five to six years’
PremiumIn an interview, Pirojsha Godrej, chairman, and Manish Shah, chief executive, Godrej Capital, said while the group is a late entrant, it sees significant growth opportunities
MUMBAI : Godrej Capital, which will house the group’s non-banking arm and housing finance business, announced a series of measures to become a world class retail financial services business and to build a ₹30,000-crore balance sheet by 2026. GIL will invest ₹5,000 crore in Godrej Capital over the next four years. In an interview, Pirojsha Godrej, chairman, and Manish Shah, chief executive, Godrej Capital, said while the group is a late entrant, it sees significant growth opportunities. Edited excerpts:
Godrej is the last Indian industrial house to enter financial services. Will the group apply for a banking licence, going ahead ?
Godrej: I don’t think so. Let’s see how the regulatory environment around this proceeds. While there is still some convergence that is to a bank’s advantage, NBFC advantages are considerable. We have got into this business assuming that banking licence is not an option. If at a stage it becomes an option, we will evaluate the pros and cons. We are quite confident that in the current format this is a huge opportunity. We are quite late into the industry. This provides its own advantages. The market is big enough and growing enough, and we don’t think it will be hard for us to establish scale and greater scale. Going about in the right manner, identifying the risks and taking the right steps is more important to us.
What are the capital raising plans for GCL?
Godrej: By the end of April, Godrej industries would have invested ₹1,500 crore into the financial services venture. That should suffice for growth this year and the next. To get to ₹30,000 crore assets under management over three-four years, the total equity required will be ₹5,000 crore. We expect the remaining ₹3,500 crore to come from Godrej Industries. Financial services industry will require a lot of capital for growth beyond that. We will look to take the GCL public in the four-six years.
What is the shareholding structure of GCL?
Godrej: Godrej Capital is a subsidiary of Godrej industries. The top team that has come on board has some equity participation in the business. Exact sharing business depends on their performance. Largely it’s a wholly owned subsidiary. Under Godrej Capital there is Godrej Housing Finance and Godrej Finance. GHFL will focus on home loans, and loans against property and unsecured loans. Godrej Capital holds a 100% stake, each, in both companies. This will be our financial services entity and as and when we enter new products or business lines, we may have separate operating entities.
Are you looking at other businesses such as insurance and mutual funds?
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Godrej: At the moment we are not. We will keep our eyes and ears open. As we establish initial success, we could venture into other financial services.
To grow your balance sheet to ₹30,000 crore by 2026, will you look to grow organically as well as inorganically?
Shah: In one or two business lines we are operating in five cities; we will go to six other cities this year. Next year we will look at the next set of geographies. Two, is line of business. We started with prime housing and LAP. Later this year we will start in a sandbox manner in affordable housing and cash flow-based lending. Inorganic will be more of a co-lending, co-origination partnership.
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