Godrej to enter non-banking lending business

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MUMBAI : The 125-year-old Godrej group has entered into the lending business launching its unit Godrej Capital Limited, which will be a subsidiary of Godrej Industries Limited.  

Godrej Capital will be the holding entity for Godrej Housing Finance and Godrej Finance Limited, its non-banking financial company (NBFC), Godrej group said in a statement. 

Godrej Finance held a NBFC licence since 1998, when it was known as Ensemble Holdings and Finance; however, it has never been active in the lending space. 

Godrej Industries has now committed to invest Rs 1,500 crore in capital in Godrej Capital. With its retail financial services business, the $4.1 billion conglomerate group has a near-term aim to build Rs 30,000 crore balance sheet by 2026, the statement further said. 

Godrej Capital currently has its footprint across Mumbai, Bengaluru, Delhi NCR, Ahmedabad, and Pune and will soon be operational in six new cities, i.e., Jaipur, Chandigarh, Hyderabad, Chennai, Indore and Surat. 

“Godrej Capital will form a key pillar in the overall growth of the Godrej Group. We started with home loans in select geographies in 2020. Having seen strong customer acceptance of our offering, we are very optimistic about the prospects of our financial services venture and will be entering new markets and enhancing our reach across key target sectors and consumer segments,” said Pirojsha Godrej, Chairman, Godrej Capital. 

The company will continue to focus on growing its secured loan book consisting of home loans and loans against property (LAP) and  is positioned to diversify into other customer segments and products. Additionally, the business aims to grow its team by 50% to approximately 500 people in this financial year to aid geographical expansion. 

“We have successfully implemented a digital-first approach at Godrej Housing Finance through innovative products such as Design Your EMI and end-to-end contactless solutions delivered digitally. This has inspired us to grow our footprint and to broaden our service offerings to different customer segments through affordable housing loans and unsecured loans. We envision Godrej Capital becoming a new- age, leading retail financial services institution in the years ahead,” said Manish Shah, MD & CEO, Godrej Capital.

In October 2020, the group launched Godrej Housing Finance, which offers mortgage loans of Rs 40 lakh to Rs 1 crore, but only for customers of Godrej Properties. Its capital adequacy ratio stood at 21.8% as of March 2021, and had a loan book of Rs 1,001 crore as of December 2021. 

Last year in July, following a Reserve Bank of India (RBI) approval, group holding company Godrej Industries transferred its stakes in its units Godrej Housing Finance and Godrej Finance to Godrej Capital (another subsidiary earlier called Pyxis Holdings), making it the group’s financial holding company.

According to data from the ministry of corporate affairs, Godrej Finance has been engaged in investment and other NBFC activities. Investment activities include dealing in listed and unlisted securities and holding 0.6% of Godrej Properties, it said. 

Godrej Industries had signalled its ambition in the finance business last year itself. “The company is looking at expanding and diversifying its business activities. It believes there is a strong potential for housing finance and non-banking finance business in our country with a decent return on investments. The housing finance business in India has been growing at a steady pace. GHFL has recently obtained a licence to operate as a housing finance company and has commenced operations. Looking at the opportunity in the housing finance sector and NBFC business, it is proposed to nurture the finance business under the company’s umbrella, being the flagship firm of the group,” it wrote to stock exchanges on 24 August.

 The Godrej group was founded in 1897 when brothers Ardeshir and Pirojsha Godrej opened a lock-making company in Mumbai after failing in earlier ventures. It has since emerged as a global conglomerate. 

The group has been going through an ownership shake-up after a family feud cropped up between the two brothers, resulting in the division of the group’s businesses among the next generation of the family. 

The group is led by veteran industrialist Adi Godrej (79) as chairman. His brother Nadir Godrej is chairman of Godrej Industries and Godrej Agrovet. Their cousin Jamshyd N. Godrej is chairman of Godrej & Boyce Manufacturing Co. Ltd, whose assets include largely undeveloped land across Mumbai. 

Adi’s son Pirojsha runs the listed Godrej Properties, which is developing some of the land owned by Godrej & Boyce, along with other projects across Mumbai. Adi’s youngest daughter, Nisaba, is chair and managing director of Godrej Consumer Products Ltd. Adi’s other daughter, Tanya, is executive director and chief brand officer of Godrej Industries.

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