Almost a year after Aditya Birla Group chairman Kumar Mangalam Birla hammered out an aggressive growth plan for the financial services business, the group has already invested around Rs 750 crore to ramp up its operations. An additional Rs 1,300 crore will be invested within the current financial year.
The financial services business of the group, which was struggling due to stiff competition thrown up by aggressive players like Reliance and ICICI, has now achieved a strong distribution as well as branch network across the country.
The expansion has been spearheaded by a new team led by CEO Ajay Srinivasan, the former chief executive of Prudential Corporation Asia. From a meagre 137 branches in March 2007, the insurance business of the group has 550 branches, as on July 1, 2008.
In the April-June quarter, the group invested another Rs 100 crore. All told, the group has pumped in Rs 600 crore into the insurance business in the last one year. “This pace of investment shows our aggressiveness since the group has put in only Rs 700-800 crore in the last nine years,” said Pankaj Razdan, deputy CEO, financial services business. The Birlas have a joint venture with the Canadian major Sun Life in insurance as well as asset management.
At 550 branches, the group has come closer to Reliance Life Insurance's overall branch network count of 740.
However, the number is still far behind ICICI Prudential's 955 branches.
While this has helped the firm climb up a rung in the insurance marketplace, the asset management business has also seen a similar leap. As on July 1, Birla Sun Life Asset Management ranked fifth in the country with an asset under management of Rs 41,093 crore, while Reliance mutual fund topped the list with a corpus of Rs 90,813 crore.
“What is important in the financial services business is a strong brand name distribution network,” Razdan said. “We have increased our talent pool significantly. Headcount in the asset management and insurance businesses would have gone up by around 50 per cent in the last 6-9 months.”
Over the next three months, Birla Global Finance, the non-banking financial company of the group, will get an investment of Rs 300-500 crore. “We have already invested Rs 200 crore in this business,” Razdan said, adding that the company is planning to introduce new products through the NBFC.
Aditya Birla Nuvo, the group’s holding company, has majority stakes in financial services, garments, telecom and BPO businesses.