Kumar Mangalam Birla, one of India’s leading industrialists, on Friday said that his Aditya Birla Group is looking to foray into asset reconstruction space, while the company is also open to opportunities arising from impending consolidation in insurance sector. “Health has been an area where we have invested in the last one year. We are also looking to make a foray into the asset reconstruction business,” Kumar Mangalam Birla said on the sidelines of an event marking the stock exchange listing of one of his group companies — Aditya Birla Capital.
A few of India’s top business leaders are known to be looking into the highly lucrative asset reconstruction business, in the wake of the government’s continued efforts to reduce the burden of stressed assets on the financial system. The central government and the Reserve Bank of India are working on a recapitalisation plan for public sectors banks reeling under massive stressed assets, RBI governor Urjit Patel said last week. According to a PTI report, 27 public sector banks, including SBI and its five associates had written off Rs 81,683 crore in the last financial year 2016-17 — the highest in the last five fiscals. Gross NPAs of the public sector banks rose to Rs 6.41 lakh crore at the end of March 2017 as against Rs 5.02 lakh crore a year ago. Hence, an entry into asset reconstruction provides a lot of opportunity.
Apart from the asset reconstruction space, Kumar Mangalam Birla is also watching the insurance sector closely. “We don’t have anything specific in the pipeline, but we do recognise that consolidation is fast happening,” Birla said referring to his assessment of the insurance industry. As many as five insurance companies have lined up mega IPOs, scheduled to hit the market in this year 2017, and which are set to raise up to Rs 40,000 crores collectively.
Earlier today, Aditya Birla Group’s financial services arm Aditya Birla Capital’s shares made their debut on the exchanges by listing at Rs 250 and soon fell 5% to trade at Rs 237.5 on NSE, in a rare instance of a company getting directly listed without an IPO. Speaking about the strengths of the company, Kumar Mangalam Birla said, “We have a very good quality of book, with hardly any NPAs are the best in class in the industry. Also, a full-fledged financial suite of products, that meet the demand of our customers, throughout his or her lifetime.”