ADITYA BIRLA GROUP PLANS NON LIFE

Aditya Birla is planning to get into the non-life sector in collaboration with a foreign partner. SK Mitra, director of Aditya Birla Management Corp reported that companies from the US, UK and Canada have been approaching Aditya Birla Group for some time. Mr Mitra said that plans for non-life operations are still at a very preliminary stage. The three joint ventures of Aditya Birla’s financial services sector are Canada-based Sun Life — Birla Sun Life Insurance, Birla Sun Life Asset Management and Birla Sun Life Distribution. Aditya Birla has also set up a non-life broking operation, Birla Insurance Advisory Services

The life operation is looking to regain lost market share in the group life sector — down to 5% from 12% three years ago. Fabien Jeudy, vice-president at Birla Sun Life, said that “the promoters will have to double the equity base of the company. They will be required to infuse fresh equity of Rp7bn ($171.4m) into Birla Sun Life’s capital in 2007-08”. Speaking to journalists, Birla Sun Life CEO Vikram Mehmi said that the assurer had changed its strategy and that it had decided to pursue “aggressive growth”, even if this meant a delay in the company reaching breakeven point. Its current paid-up capital is Rp6.72bn.

Mr Mehmi noted that the growth rate in life assurance had been greater than estimated, and that Birla Sun Life wanted to grow “in line, if not faster than the industry”. Branch numbers would be increased by at least 400 this financial year, Mr Mehmi said, while the agency force would be increased substantially from the current 58,000. The company would also target “second- and third-rung” customers of its bancassurance partners Citibank and Deutsche Bank.