1

SCUF—News Letter—Breeze— October, 2012

Shri R.Thyagarajan

Chairman

Shriram Group

(Edited excerpts from the interview in

―Business Today‖

dt 30th Sep.2012 )

How did the name, Shriram, come about?

In 1974, like most finan-cial businesses did those days, we applied for registration of our chit fund business with the name Lakshmi. The authorities told us that Lakshmi was not available. They, instead, of-fered us Shriram. We went ahead with that. W h a t m a d e yo u s t a r t t h e G r o u p ?

Those days I was working for New India Assurance Co. in Hyderabad. I had a friend, A.V.S. Raja, working for the Railways in the same city. It was our love of music that brought us together. Both of us were associated with this organisation called Kalasagaram which worked to promote music. Raja wanted to get out of the Railways, and start a business of his own for which he needed capital. So we decided to start a chit fund as that was the easiest way to get capital. All that we needed to do was put together a few people. We started the chit fund with Rs 1 lakh as capital, and he became its managing director. I, however, continued to work for New India Assurance and later for Vysya Bank a n d J . B . B o d a & C o u n t i l 1 9 9 0 .

How were you, then, involved with the Shriram

Group ?

I had a limited role in that I would put together peo-ple and ideas. I cannot claim to have had a vision those days, but I always tried to create something o u t o f w ha t w as a va i la b le t he n . The Shriram Group does not seem to be as suc-cessful in non-financial businesses as it is on t h e f i n a n c e s i d e …

I would say we have been doing well in non-financial services business also. Over the years, we have been instrumental in creating at least three to four world class enterprises outside financial ser-vices, which we both promoted and developed. To-day, of course, we don't own them: Shriram Sem-bawang Logistics, Hi Tech Arai and Medicorp Tech-nologies. All of them are very good non-financial enterprises which we created from scratch, devel-oped and exited. We had good (joint venture) part-ners. They bought the respective businesses ex-cept Medicorp which was sold to Matrix. We, of course, had this business that struggled, too. We were making pet bottles, under the brand name Shri Pet. We ran it for about eight years until 2003. The brand was well known in Tamil Nadu. One good offshoot of this business was A.R. Rahman's jingle on the product. He was not yet well-known at that time, and this jingle was his first interaction with general public. We had this jingle on the radio, and it caught on and became popular.

Contd…P 4

If a drop of water falls on a Lake, its identity is lost; If it falls on Lotus leaf, it

shines like a Pearl. Drop is the same; but the company matters.

Special points of interest:

Group Chairman’s Interview

ECS

PF

Help that counts

Shriram IGNOU College

Inside this issue:

Q & A - ECS 2

Messg. from TED — PF 3

Group Chairman’s interview contd……... 4

Greetings 6

Education & Employment 7

Helping hand 8

Navarathri - Durga Booja - Greetinigs 9

1st October, 2012 Thisai: South Thendral: 07

2

SCUF—News Letter—Breeze— October, 2012

Q.1. What is Electronic Clearing Ser-

vice (ECS)?

Ans It is a mode of electronic funds transfer from one bank account to another bank account using the services of a Clearing House. This is normally for bulk trans-fers from one account to many accounts or vice-versa. This can be used both for making payments like distribution of dividend, interest, salary, pen-sion, etc. by institutions or for collection of amounts for pur-poses such as payments to util-ity companies like telephone, electricity, or charges such as house tax, water tax, etc or for loan installments of financial institutions/banks or regular

investments of persons.

Q.2. What are the types of ECS? In what way they are different from

each other?

Ans There are two types of E CS:

ECS (Credit) and ECS (Debit).

ECS (Credit) is used for affording credit to a large number of bene-ficiaries by raising a single debit to an account, such as dividend,

interest or salary payment.

ECS (Debit) is used for raising debits to a number of accounts of consum-ers/ account holders for crediting a

particular institution.

Working of ECS Credit System

Q.3. Who can initiate an ECS (Credit)

transaction?

Ans ECS payments can be initiated by any institution (called ECS user) who have to make bulk or repetitive payments to a number of beneficiaries. They can initiate the transactions after registering themselves with an approved clearing house. ECS users have also to obtain the consent as also the account particulars of the beneficiary for participating

in the ECS clearings.

The ECS user's bank is called as the sponsor bank under the scheme and the ECS beneficiary account holder is called the desti-nation account holder. The desti-nation account holder's bank or the beneficiary's bank is called

the destination bank.

The beneficiaries of the regular or repetitive payments can also re-quest the paying institution to make use of the ECS (Credit)

mechanism for effecting payment.

Q.4. How does the ECS Credit sys-

tem work?

Ans The ECS users intending to effect payments have to submit the data in a specified format to one of the approved clearing houses. The list of the approved clearing houses or the list of cen-tres where the ECS facility has been provided is available at

www.rbi.org.in.

The clearing house would debit the account of the ECS user through the account of the spon-sor bank on the appointed day and credit the accounts of the recipient banks, for affording on-ward credit to the accounts of the

ultimate beneficiaries.

Q.5. At which of the centres

ECS facility is available?

Ans ECS facility is available at 92 centres as on 30.09.2011 and the full list is available

at the web-site of RBI.

(refer web-site of RBI

for updated list)

The beneficiaries need to maintain an account with one of the banks at these centres in order to avail of

the benefit of ECS.

Electronic Clearing Service (ECS) - FAQs

Compiled By:

CH. P.V.Krishsna Rao,

Zonal Office, Tirupathi. To be contd… in next issue

Q.6. How does a benefici-

ary participate in ECS

(Credit ) scheme?

Ans The beneficiary has to furnish a mandate giving his consent to avail of the ECS facility. He should also communicate to the ECS user the de-tails of his bank branch and account particulars. Such authorisation form

is called a mandate.

Q.7. Will there be any

need for the beneficiary to

alter this mandate?

Ans Yes. In case the information/account par-ticulars undergo change, then he has to notify the ECS user to carryout changes in order to en-sure continued benefits from the ECS user. In case the account particu-lars at the destination branch do not match, the destination branches would return the credit through their service branch to the clearing

house.

Q.8. Who will communi-

cate the beneficiaries

about the credit?

Ans It is the responsi-bility of the ECS user to communicate to the bene-ficiary the details of credit that is being afforded to his account, indicating the proposed date of credit, amount and the relative particulars of the pay-ment, so that the benefici-ary can match the same with the details furnished by the bank in the account

statement/passbook.

3

SCUF—News Letter—Breeze— October, 2012

By

Ms. S. Muthumariamma TED.

Employees' Provident Fund Scheme takes care of the following needs of the members of staff. (i) Retirement (ii) Medical Care (iii) Housing (iv) Family obligation (v) Education of Children (vi) Financing of Insurance Polices Employees' Provident Fund Interest rate: The rate of interest is fixed by the Central Government in consultation with the Central Board of trustees, Em-ployees' Provident Fund every year during March/April. The interest is credited to the members account on monthly running balance with effect from the last day in each year. Benefits: A) A member of the provident fund can withdraw full amount at the credit in the fund on retirement from service after attaining the age of 55 year. Full amount in provident fund can also be withdraw by the member under the following circumstance:

A member who has not attained the age of 55 year at the time of termination of service. A member is retired on account of permanent and total disablement due to bodily or mental infirmity. On migration from India for permanent settlement abroad or for taking employment abroad. In the case of mass or individual retrenchment.

B) In the case of the following contingencies, the payment of provident fund be made after complementing a continuous period of not less than two months immediately preceding the date on which the application for withdrawal is made by the member:

Where employees of close establishment are transferred to other establishment, which is not covered under the Act:

Where a member is discharged and is given retrenchment compensation under the Industrial Dispute Act, 1947.

Withdrawal before retirement: A member can withdraw upto 90% of the amount of provident fund at credit after attaining the age of 54 years or within one year before actual retirement on superannuation whichever is later. Claim application in form 19 may be submitted to the concerned Provident Fund Office. Accumulations of a deceased member: Amount of Provident Fund at the credit of the deceased member is payable to nominees/ legal heirs. Claim appli-cation in form 20 may be submitted to the concerned Provident Fund Office. Transfer of Provident Fund account: Transfer of Provident Fund account from one region to other, from Exempted Provident Fund Trust to Unexam-pled Fund in a region and vice-versa can be done as per Scheme. Transfer Application in form 13 may be sub-mitted to the concerned Provident Fund Office. Nomination: The member of Provident Fund shall make a declaration in Form 2, a nomination conferring the right to receive the amount that may stand to the credit in the fund in the event of death. The member may furnish the particu-lars concerning himself and his family. These particulars furnished by the member of Provident Fund in Form 2 will help the Organization in the building up the data bank for use in event of death of the member. Annual Statement of account: As soon as possible and after the close of each period of currency of contribution, annual statements of ac-counts will de sent to each member through of the factory or other establishment where the member was last employed. The statement of accounts in the fund will show the opening balance at the beginning of the period, amount contribution during the year, the total amount of interest credited at the end of the period or any with-drawal during the period and the closing balance at the end of the period. Member should satisfy themselves as to the correctness f the annual statement of accounts and any error should be brought through employer to the notice of the correctness Provident Fund Office within 6 months of the receipt of the statement.

Message from TED

Employees’ Provident Fund Scheme 1952

4

SCUF—News Letter—Breeze— October, 2012

―We

know we can run it, and

run it in a

differ-ent

way‖.

- Our Group Chairman

on

Banking

Business

Contd…...from

P 1

Edited excerpts from the interview in

―Business Today‖ dt 30th Sep.2012

You exited some businesses because of issues with the regulator?

Yes. We exited under regulatory pressure. One or two of them (regulators) felt we were diversifying into non-finance businesses to siphon off funds. We were, in fact, diversify-ing more to add value to shareholders. Those days, inflation was very high, and we thought diversifying into non-financial businesses was a good hedge against inflation. But we exited to demonstrate our good intentions. Has Shriram Properties reached the expected levels?

It is doing quite well and has its presence in Bangalore, Chennai, Vizag, Coimbatore and Kolkata. It was started with a capital of Rs 5 crore or so, and it has completed and deliv-ered 7 million square feet of space, and another 10 million square feet is in the works. Our information technology company, Take Solutions, too has evolved with our own team and shaped up well. We entered non-financial services only around 1987. That way the non-financial services business is younger by 13 years. We have to see what it will be in another 13 years. What is your Group's approach to entering a business?

One peculiar thing about the Shriram Group is we are not into any business on our own, but we support people who are entrepreneurial. We go with them and provide financial support to them. There is this diagnostic company and it is very enthusiastic about the business. Similarly, there is another company into pharma formulations. We have sup-ported both of them. Like a private equity player? No, I would not call it private equity. I would say we are more of venture capitalists, or play the role of angel investors. We provide first stage support. This is what we have been doing for many enterprises. You will find a number of small, miniscule and medium scale units supported by us. We don't say all of them should grow very fast or very big. We don't have that kind of ambition. We even help entrepreneurs with the Shriram brand if needed. We don't acquire any company out of any intention to do so. We buy only those busi-nesses which come on their own to us. It is more of a partnership than acquisition. Many

of our businesses evolved like that.

Can you give an example of a business you had no intention to start but put together?

Shriram EPC was a business that was not our own, but only assembled by us. It is today worth more than Rs 1,500 crore. Some businesses were struggling. There was a cooling tower business, a conveyer equipment com-pany, an EPC company, a water treatment business etc. We took over either the businesses or teams from these firms, brought them together, combined them into one, and they became Shriram EPC.

Sree Jayajothi is part of your group. How does it look?

Jayajothi is going to do well. We started financing it as an EPC business, and its promoter had difficulties in com-pleting the project. We then converted the loan into equity. Jayajothi is today supported by the Shriram Group, and I am sure it will do well. How is your stock broking business shaping up?

We are doing well. We help people to enter the equity culture. They say financial domain acquires depth if you create an equity culture. It was actually an accidental acquisition. We made an investment to help somebody. People who owned the business exited, and our people took charge of it. Banking seems to be a gap in your financial services business? Any plans to get there? If banking is defined in a narrow sense as pooling the savings of the community and lending it to people, then we are already in that business, and our size of Rs 50,000 crore is bigger than the turnover of many banks. These days banks want to offer a wide range of financial services to achieve economy of scale. Banking these days in-volves a broad spectrum of activities. Formally we have not got into a bank. We don't have plans, or we never had a vision of that kind, but if there is an opportunity, we will assemble resources and get into the banking business. We know we can run it, and run it in a different way. There will be a learning process during which we will not do

well. We are aware of it.

5

SCUF—News Letter—Breeze— October, 2012

Contd…...

from P 4 ―We must support manufacturing even if it hurts profits in the short term‖ - our Group Chairman

Can you tell us something about your interest in classical music?

I have been listening to classical music for almost 70 years now, or since I was five. Around 1953, I set-tled down to Lalgudi Jayaraman (well-known violinist). I listen to him only. I consider classical music is best with Lalgudi. He has enormous commitment and passion to create excellence. The true genius is the one who has an infinite capacity to take pains to achieve perfection. Lalgudi is one of them. I have the greatest admiration for him. He is not just a great interpreter of music but a great creator. He is a symbol of excellence. In fact, my niece Akhila Natarajan was trained under him. I have treasured 1,500 hours of recorded collec-tions of Lalgudi.

Lalgudi was also associated with Shriram Group in some way, right?

Yes. In fact, we started a partnership firm, Shriram Investments Ltd, to ensure the maestro did not suffer any financial difficulty. Later we made him an independent director on the Shriram City Union Board. He was very shy when it came to money, and would often say his sitting fee from board meetings was more than what he was getting from performances.

What message does Lalgudi's life as a musician hold for businessmen?

You need enormous commitment and passion to create excellence. You need to take infinite pains to create a successful enterprise. I often tell my young colleagues about this and ask them not to give up anything midway. Every business has its ups and downs. In India, you get talented people to run any business. An enter-

prise needs five to six years before it can stand on its own. One needs patience.

How do you want the Group to do business in the coming days?

I would expect the Shriram Group to continue to play its useful role, not just by providing financial sup-port for the excluded group, but also by supporting manufacturing and other entrepreneurial initiatives. I would expect the group to strengthen not merely the financial services business, but also sacrifice some of its wealth to support non-financial business particularly in manufacturing and innovation. The group should do it even if it means some cost to its immediate profit. That is why we divided the group resources and allocated 25 per cent to another trust into which we transferred all our investments in non-financial business. Today, the wealth may be Rs 1,000 crore and, in three years, it may come down to Rs 300 crore. But one should not worry about that. At the end of 15 years, if you are back to Rs 1,000 crore, it is okay. But you have supported manufacturing, innovation etc. The safety and security of the financial services may not be available to this sector, but the community needs it. This is what should be our cor-porate social responsibility: allocate 25 per cent of our wealth in building new businesses. I would be very happy if the Shriram Group enthusiastically engages itself in building enterprises in the coming two

decades.

The Chennai-based Shriram Group's co-founder

R.Thyagarajan (75) is as much an aficionado of Carnatic classical music as he is a financial wizard. He has been listening to music since he was five and is

an ardent admirer of violin maestro Lalgudi.G. Jayaraman, to help whom he even started a business. A mathematician and statistician by training, he discusses the humble beginnings, journey and

the philosophy of the Shriram conglomerate which today has assets under management of Rs 60,000 crore

in financial services and revenues of Rs 4,500 crore in other businesses.

Edited excerpts By K.R. Balasubramanyam - Interview dt 11.09.12.

Courtesy and thanks to Business Today (Issue dt 30.09.12)

Contributed by:

S. Rajagopalan

Sr. Manager - Cochin.

6

SCUF—News Letter—Breeze— October, 2012

Message from TED

7

SCUF—News Letter—Breeze— October, 2012

Message from TED

Sri R.Jayaraman, Asst. Vice-President is handing over the appointment order to the student in the presence of

Sri PL Arunachalam, V P, EF & Legal, and

Smt.M.Subashree, Head , TED.

Recipients of appointment orders

with our Executives

On 07.09.2012

Shriram – IGNOU Community College,

Thiruneermalai, Chennai – 600 044

Certificate Programme in Non-Banking Financial Company

Second Batch 2011 - 2012

Number of Students : 10

Faculty support by :

Sri K.Ramprasath

(NBFC & Accountancy)

Sri J.Muralikrishnan

(English)

Smt R.Amudha

(Computer)

8

SCUF—News Letter—Breeze— October, 2012

By Subhashree M, Head TED

Emp: No. S1271

Shri Sandip Patel,

Executive @ Surat Branch, Gujarat.

Earlier it was reported that Shri Sandip Patel, met with an accident at Surat

on his way to office, on 12th August ’12.

Immediately he was hospitalized and treated well.

(Injuries – Fracture in Leg, Stitches above Eyes, Face)

He was operated upon and is recovering now.

Let us all pray for his speedy recovery to bounce

back to achieve greater things in life.

On a representation from our State Head of Gujarath , an appeal was made to all SCUFians

to extend their helping hand financially, to meet out some of the medical expenses of the

said executive.

The response was spontaneous , good and overwhelming .

We from TED appreciate the gesture shown by SCUFians to our brothern SCUFIan

at the time of need.

.

Message from TED

9

SCUF—News Letter—Breeze— October, 2012

Mail your

views, reviews, feed-back,

suggestions and

comments to

efchennai@shriramcity.in

Our members of staff are requested to contribute to our News Letter ―Breeze‖ by way of articles, photos, art work done by them, tips, messg. on special events at their work place, and such other matter of i n t e r e s t f o r

publication.

From Editorial Desk:

Communication Address:

Editorial Committee, (News Letter—Breeze)

SCUF, Santhome Office, Chennai—600 004 Phone: 43925300

Email: efchennai@shriramcity.in

Editorial Committee

Shri K.Subramaniam Senior Consultant, HO.

Smt M.Subhashree TED., Santhome Office

Sri M.Radhakrishnan

Consultant, Santhome Office

Our News Letter

―Breeze‖

can be accessed in

the

following URL:

http://27.251.33.232