The Hindu Business Line : `It has to be seen how capital-protection schemes are received in the market'

The Aditya Birla Group, which runs mutual funds, insurance and distribution businesses under the Birla Sun Life umbrella, is seeking ways to use some of the opportunities that Mr S.K. Mitra, Director - Financial Services, says have lately become evident in the Indian market.

He also dwells on a range of other issues. Excerpts.

With MFs being allowed to do capital protection oriented funds, will insurance companies be somewhat disadvantaged?

No, not if you consider all that insurers are trying to bring to the table, especially by way of unit-linked plans. The latter, as everyone following market trends will agree, are rapidly gaining ground.

These clearly offer investors a benefit - insurance cover - that mutual funds cannot.

It remains to be seen how the investing public takes to capital protection oriented products that asset management companies are now expected to come out with.

How have recent developments in the equity market impacted your investment funds?

If you consider the last one year, say till August 31, our funds have provided between 7 per cent and 32 per cent, depending mainly on the equity allocations they had made. The equity components vary from fund to fund.

Protector, for instance, can invest up to 10 per cent in equity and has given 7.12 per cent in the past year.

At the other end is Magnifier, which may have anything between 50 per cent and 90 per cent in equity. This has given 32.7 per cent.

Incidentally, our assets under management have gone past Rs 2,600 crore, distinctly more than the corresponding score for last year, which was Rs 1,400 crore or so.

Can't the group strengths be utilised to penetrate the market?

We are already doing it, keeping in mind the need to widen our distribution base.

Earlier, we had our rural foray in Renukoot. There was also an arrangement with Madura Garments' tailors. The idea is to penetrate smaller centres by expanding our network. There is also a promising NRI segment to cater to.

Currently, there are over 100 branches and more than 50 outstation agency manager locations.

We have also brought about a number of bancassurance tie-ups.

Companies like ours need to expand effectively to meet the needs of the country's huge insurable population. The presence of strong groups behind insurance providers can only expedite their plans.

What is the possibility of Birla Sun Life foraying into non-unit linked products?

So far we have concentrated our energies on unit-linked plans. However, the case for the other category has been discussed at length at a senior level.

We will line up other unit-linked plans in future. But I cannot tell you exactly what we are proposing to do by way of new products, but it is clear that the market will be closely studied and consumers' demands analysed before any of these are rolled out.

Has the insurance outfit's valuation been done?

A number of broking firms and other entities have tried to do this and various conclusions have been drawn. Obviously, this company's valuation will have a bearing on the main stake-holder's valuation as well.

In this case, this is a JV with Sun Life of Canada, with Aditya Birla group holding the majority share.

The capital base stands at Rs 520 crore.

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