 "Kumar Mangalam Birla,Birla, Mangalam")
The Aditya Birla group (ABG) is looking to be among the top three players in the financial services business like lending, asset management (mutual funds), and life insurance. The cements-to-fashion conglomerate launched an omnichannel digital platform on Tuesday and is betting on it to add 30 million customers in three years, said Chairman Kumar Mangalam Birla.
Speaking at the launch of Aditya Birla Digital Capital (ABCD), Birla said the new direct-to-consumer platform will further help the group's financial services arm Aditya Birla Capital Ltd (ABCL) to acquire customers, especially from the younger generation, adding to its current 35 million user base.
“It will acquire customers digitally at scale, cross-sell and up-sell in a frictionless manner and become a full-stack financial services provider,” Birla said, talking about the platform, which was built at a cost of about Rs 100 crore and has over 400 team members from disciplines like technology, data analytics and distribution.
Aditya Birla Capital's shares closed at Rs 203 a share on BSE on Tuesday.
Growing competition
Apart from ABCL, Bajaj Finance and Tata Capital have launched an app to sell financial products and scaled up investments, while the latest entrant Mukesh Ambani-backed Jio Financial Services (JFS) is also planning to use Jio's digital infrastructure to sell financial products to investors. JFS's entry into mutual funds, wealth management, and stock broking has also led to the competition in the financial services space becoming intense. The Hinduja group is also betting on financial services with the acquisition of Reliance Capital, which had filed for bankruptcy.
Going forward, Birla said the financial services sector is expected to outpace India's gross domestic product (GDP) growth by two times in five years, and the three key components of financial services model – credit, investments, and insurance — are expected to grow at a compound annual growth rate (CAGR) of 19-21 per cent over three to five years.
“This performance will mirror the explosive growth potential expected in the financial services sector over the next few years,” Birla said.
The assets under management (AUM) of ABG's lending unit Aditya Birla Capital Finance has grown by about two times to over Rs 1 trillion, propelling it to become the fourth largest diversified non-banking financial company (NBFC) in the country. Its housing finance loan portfolio has also witnessed growth of 27 per cent year-on-year (Y-o-Y), as on December 31, 2023. The total premium of life insurance business stood at Rs 11,101 crore in the first 9 months of the financial year ended March 31, 2024 (FY24). The average AUM of the asset management company (AMC) unit was Rs 3.11 trillion as of December quarter of FY24.
ABCD could tap into the ecosystem of businesses like cement with 150,000 dealers and retailers and the recently launched paints business with over 50,000 channel partners. The group also has access to a consumer ecosystem of over 250 million spread across telecom, fashion retail and real estate. The employee base of ABG will be tapped to sell financial services products.
Vishakha Mulye, chief executive officer, ABCL, said while all in-house financial products would be made available on the digital platform, the company will form strategic partnerships for gold and general insurance products.
The platform is housed under Aditya Birla Capital Digital Ltd (ABCDL), a wholly owned subsidiary of ABCL.
Pankaj Gadgil, head – digital, payment & analytics, ABCL, said the firm was targeting the thriving Indian middle class, especially those in the age bracket of 22-35 years. There are about 200 million people in this age group according to the firm, and the tally is expected to touch the 300 million mark by 2030. Those in this age group have an annual income between Rs 5 lakh and Rs 35 lakh.
ABCL’s consolidated revenue grew 22 per cent Y-o-Y to Rs 23,566 crore and consolidated profit after tax (PAT) was up 44 per cent Y-o-Y at Rs 2,090 crore in the first 9 months of FY24. The company has 1,462 branches across the country, and added over 500 branches in the last two years.
