Mumbai Godrej Capital, which will be home to the group’s non-banking arm and housing finance business, announced a slew of measures to become and build a world-class retail financial services business. 30,000 crore balance sheet by 2026. GIL will invest 5,000 crore in the next four years in Godrej Capital. Godrej Capital Chairman Pirojsha Godrej and Chief Executive Manish Shah said in an interview that although the group is a late entrant, it sees significant growth opportunities. Edited excerpt:
Godrej is the last Indian industrial house to enter financial services. Will the group apply for banking license going forward?
Godrej: I do not think so. Let’s see how the regulatory environment around it plays out. While there is still some convergence which is to the advantage of the bank, the advantages of NBFCs are considerable. We have entered into this business assuming that banking license is not an option. If at some stage this becomes an option, we will evaluate the pros and cons. We are confident that this is a huge opportunity in the current format. We are very late in the industry. It offers its own advantages. The market is huge and growing tremendously, and we don’t think it will be difficult for us to scale and scale. It is more important for us to proceed in the right way, identify the risks and take the right steps.
What are the capital raising plans for GCL?
Godrej: Godrej Industries will have invested by the end of April 1,500 crore in a financial services venture. That should be enough for growth this year and next year. to get 30,000 crore assets under management in three-four years, the total equity required would be 5,000 crores. we look forward to the remainder Rs 3,500 crore will come from Godrej Industries. The financial services industry will need a lot of capital for further growth. We will try to take GCL public in four-six years.
What is the shareholding structure of GCL?
Godrej: Godrej Capital is a subsidiary of Godrej Industries. The top team on the board has some equity participation in the business. The exact sharing business depends on their performance. Broadly speaking, it is a wholly owned subsidiary. Godrej Housing Finance and Godrej Finance are under Godrej Capital. GHFL will focus on home loan, loan against property and unsecured loan. Godrej Capital holds 100% stake in both the companies. This will be our financial services unit and we may have different operating entities whenever we enter new products or business lines.
Are you looking at other businesses like insurance and mutual funds?
Godrej: At the moment we are not. We will keep our eyes and ears open. As we establish initial success, we can venture into other financial services.
To advance your balance sheet 30,000 crores by 2026, would you like to grow organically and inorganically?
Shah: We are operating in five cities in one or two business lines; We will be visiting six other cities this year. Next year we will look at the next set of geography. Two, is the line of business. We started with Prime Housing and LAP. Later this year, we will embark on a sandbox approach to affordable housing and cash flow based lending. Inorganic would be more of a co-borrowing, co-origination partnership.
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