The Hindu Business Line : `Investment planning, a promising growth area'

UP against formidable competition from the big fish in the financial services industry, the New Delhi-based RR group is trying to find a firmer foothold in it by entering into new areas and consolidating existing operations.

The group is engaged in, inter alia, retail distribution and insurance advisory. Mr Rajat Prasad, Managing Director, RR Financial Consultants, told Business Line that it now proposes to "fill the gaps in the business", initially with a foray into stockbroking. He also shared his views on the market. Excerpts from an interview.

Retail distribution already seems to be a crowded market with players of all sizes operating in it. How do you rate growth prospects here?

The market has been expanding rapidly, thanks to the increasing number of people who are turning to active investment after simply being net savers for long. At the same time, it has benefited from the intense efforts put in by distributors, especially the larger ones. There is considerable scope for further development, which will be triggered by new challenges faced by investors. I am referring to diminishing returns from fixed income investments, volatility in equities and all the uncertainties associated with bearish conditions.

How has the business developed for you in recent times?

We have seen a compounded annual growth of about 50 per cent in the last couple of years, recessionary circumstances notwithstanding. As for the other emerging area - insurance advisory - the market is just about beginning to shape up and many changes are likely to happen on this front in the near future. The group has acquired the technology necessary to support the business. Overall, we have a customer base of around two lakhs. It must be mentioned here that debt (mobilisation) constitutes a major part of the operations.

You plan to offer stockbroking...

Yes, we propose to set up a broking subsidiary, starting first with the NSE. This will help us cater to clients who otherwise make use of our existing services. There will be synergy for someone who wishes to trade and is simultaneously keen on mutual funds and insurance. RR incidentally is also interested in extending fund-based services, but I will not be able to elaborate much on this matter at the moment. The group currently operates from about 30 locations and intends to increase its points of presence.

What else do you think will emerge as a promising venture?

Investment planning should provide us with important opportunities. In India, this is still quite nascent although we have seen some developments in the recent past. An investor must plan his exposure to the market through prudent asset allocation strategies. The idea is to get the best out of one's investment keeping in view all risk factors and issues like safety of capital and liquidity.

Volatility and downward pressures currently mark the equity scenario. How do you react to this?

These factors will come alive time and again. One cannot rule out the recurrence of periods of uncertainty. Any way, March is always a difficult month as tax-payment issues loom large during this time. Also, there are elections coming up - another factor that seems to have added to the uncertainty. One school of thought suggests that the Sensex at 5,500 may be the right entry point. I am of the opinion that the market will look up once the poll process gets over. In fact, there may easily be a 20 per cent upside.