After studying law I vectored towards journalism by accident and it's the only job I've done since. It's a job that has taken me on a private jet to Jaisalmer - where I wrote India's first feature on fractional ownership of business jets - to the badlands of west UP where India's sugar economy is inextricably now tied to politics. I'm a big fan of new business models and crafty entrepreneurs. Fortunately for me, there are plenty of those in Asia at the moment.
In Rajasthan’s towns and cities, getting loans for second-hand trucks or three-wheelers is no longer hard. But, in 1995, when Au Financiers had just started, borrowing at reasonable interest rates was tough. Moneylenders charged usurious rates while banks were wary of lending to buyers who lacked documentation. Consumers often found themselves in a fix.
Targeting this niche, Au Financiers (incidentally, Au is the periodic symbol for gold) started with a small branch in Jaipur, focusing on lending that would enhance livelihoods. That is, by giving loans for trucks and three-wheelers. Growth was slow till 2002 but the initial phase placed the company on a solid wicket for the massive expansion that was to take place in the next 10 years.
In 2003, Au Financiers tied up with HDFC Bank to provide loans in regions the big housing financier could not reach. The company has since grown and now lends to small businesses as well as for housing. Its Rs 4,200-crore loan book has enabled it to raise money from blue-chip names like Motilal Oswal, IFC, Warburg Pincus and ChrysCapital.
The man behind it
In 1995, after Sanjay Aggarwal, Au Financiers’ promoter and managing director, took his chartered accountancy exams, he realised he didn’t want to work for anyone. Instead, he wanted to create something on his own and the finance business seemed to be synergistic with his qualifications.
Raising money was a problem but Aggarwal got his first break with high net worth individuals who were willing to invest. “It was frustrating to be in a business that was growing slowly,” he admits. Then, in 1997, two years after he set up shop, non-banking finance companies (NBFC) came under a cloud after the CRB Group promoted by CR Bhansali was found guilty of fraud and went bust. But Aggarwal stuck it out; he says he was more interested in understanding credit patterns and behaviour. For instance, why do people in certain regions not pay back while others do? What are prudent provisioning norms? How does a business develop tools to assess creditworthiness?
This thought process enabled Aggarwal to grow Au Financiers into a sustainable business. Today, it is considered a rising star in the financial sector. It has expanded to 10 states and Aggarwal has even instituted a stock ownership plan for his employees. His aim is to build an organisation that is known for its professionalism and has the same corporate governance standards as HDFC.