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Mr Sudip Bandyopadhyay

N.S.Vageesh

Chennai, Sept.24 There were 25,000 mobile phone subscribers in India in the mid-nineties. And tariffs included a charge of about Rs 16 per minute for outgoing and Rs 8 per minute for incoming local calls.

A little over a decade later, the number of mobile subscribers in India has swelled to 200 million while tariffs are now the lowest in the world. About seven million subscribers are being added every month.

Mr Sudip Bandyopadhyay, Director & Chief Executive Officer, Reliance Money Ltd, recites these facts about the transformation in the telecom sector when asked about his company’s strategy. Reliance Money is a new player in broking, distribution and money transfer, and is part of the Anil Ambani group.

The tour-de-force on telecom comes handy in understanding what Reliance Money plans to do. Mr Bandyopadhyay says, “We will do in broking what we have done in telecom!”

Reliance Money, which started operations in April 2007, is adding about 2,000 to 2,500 customers every day. It currently has about 1.65 lakh customers. And the traded volumes have crossed about Rs 1,200 crore.

At the core of their entry strategy in this business is the Reliance group Leitmotif – Expand the market and cut transaction costs to the bone.

When asked about the market share for Reliance Money given the competition from the likes of ICICI Direct, Kotak, Motilal and Geojit, besides others, Mr Bandyopadhyay says, “We haven’t entered this business to take a share in this market. We are going to expand the market.”

Mr Bandyopadhyay explains, “The number of investors in mutual funds is about 30 million going by the folios. The number of individual bank accounts in the country is about 330 million. But the number of demat accounts has stagnated around 5.8 million for the past decade.”

He adds, “We are not looking at this 5.8 million. Just as someone might have looked at those 25,000 subscribers of mobile phones in the mid-nineties and concluded that the market was that small. We are looking at the opportunity for market expansion. We are going to be present in 5,165 tehsils by the end of the year and hope to have about 10,000 outlets by March 2008.”

That would give Reliance Money an all-India presence and a reach that is on a par with what State Bank of India enjoys with about 9,500 branches.

Combine the distribution network with a bold pricing strategy, and it is easy to see why Mr Bandyopadhyay’s claims may have to be taken seriously.

Reliance Money’s key business driver may be its pricing strategy. It has decided to levy a flat charge of Rs 500 per annum for trading volumes of up to Rs 1 crore and slightly higher charges for higher volumes. Currently competing brokerages charge something in the region of 0.5% to 1% on each transaction.

As Mr Bandyopadhyay puts it, “Brokers charge you 1% if you buy 10 shares. They charge someone else 1% of the cost of 100 shares, if they buy 100 shares and similarly 1% of 1,000 shares if you buy 1,000 shares. There is no extra effort involved except punching in an extra zero. Why pay just to punch an extra zero?”

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