'For us, this is the delivery phase. And markets are tough'

Updated: Jul 1 2008, 04:48am hrs
Sam Ghosh is no stranger to the world of high finance. As the regional CEO for MENA and South Asia of Allianz SE, Bahrain, and the CEO of Bajaj Allianz Life Insurance Company before that, he is a familiar face in the financial circuit. Now, as the CEO of Reliance Capital, the financial services flagship of the Reliance Anil Dhirubhai Ambani Group (R-ADAG), Ghosh has his task cut out: to bring the financial services companies to profits at a time when the markets are volatile, and competition intense. In his first interview since taking charge at Reliance Capital on April 1, Ghosh speaks with FEs Sourav Majumdar about the challenge and more. Excerpts:

Now that youve taken charge at Reliance Capital, have you done a stock-check of businesses and how theyre faring

Our asset management company is in the number one position and doing very well

But thats only by assets under management. In general, asset management companies are facing huge challenges

Yes, all mutual funds are undergoing tough times, thats market driven. But obviously we try to achieve whatever best we can. I think markets will continue to remain tough. The good thing about our AMC is its gone retail, and thats why it has been able to sustain the market conditions. Going retail means customers tend to be sticky, so our plan is to go further.

Which is also what the industry needs now

Absolutely. In the asset management industry, most are still concentrated in the top cities.

Theres also the need to diversify and invest abroad, with the Indian markets getting more volatile

At this point, though we have a Singapore-based fund and Mauritius-based fund, they are targeting NRIs and institutional customers for inward investing. We havent yet focused on the outward bound or foreign market. That hasnt yet been a focus area in that we havent yet been able to build up that expertise.

On NRI money, there is the Reliance Money network. Are you leveraging that

Reliance Money is doing that. But its gone into few countries so far. But on overseas investing, in due course that will need to be built up, fund management expertise etc. Thats something well have to learn. Thats as far as asset management is concerned. Reliance Money is also doing well, theyve spread their branch network and also, more importantly, their franchisee network. Reliance Money has over 10,000 outlets now, of which 500-600 are owned by us. Its a big network. The broking bit has been a bit slow, but that again is because of market conditions. The advantage is that there is also the opportunity to undertake distribution of other financial services products. They distribute products of all companies. The focus has to be on increasing fee-based income. Theyre also expanding in to some countries, most of the growth markets.

Hows your general insurance foray faring

I think the market is tough now, with detariffing and competition. They are powering ahead and once again, here too there is a retail focus.

But youre also believed to be aggressive in bidding for corporate accounts. Theres lots of talk of how aggressively youre trying to edge out rivals for the big accounts.

In the retail side. But were not that much present in the big corporate accounts side. So I wouldnt say that were aggressive. If you look at our business, nearly 80% is retail.

Will that mix remain

Wed like to change it a bit, but I dont see it changing that much. Wed like to take it to, maybe, 70% retail, 30% corporate, but retail will clearly be our bread and butter in general insurance. Very retail-focused. But I think, with detariffing, the market is very tough on the corporate side. Competition is very tough. In life insurance, growth has been very fast. Were the fastest-growing. Weve been latest starters, and are at number 4 position in the private sector.

Any broad plans to list these insurance companies

No, these companies will not be listed. Then, consumer finance is also growing. The book size now is about Rs 7,500 crore.

As late entrants in the insurance market, and having already undertaken one acquisition, that of AMP Sanmar, would you be open to further acquisitions

Were looking at organic growth now. Initially, the acquisition made sense because you were new and wanted to have a branch network. Now, you have a network. So why would you want to acquire now

Youre in almost every area of financial services other than pure banking. What new areas are you looking at, since a banking licence will clearly have to wait awhile

Institutional broking is an area weve started. Investment banking is something weve not firmed up on.

Would you leverage your growing overseas network for institutional broking Do you see yourself as a major FII broker at some point

Institutional broking will be mainly domestic now.

But with the M&A market being what it is, doesnt investment banking make sense

(Smiles) At this point, the thought hasnt gone into it. Lets see.

Is the plan to be in as many lines of business, with a retail focus

Yes, retail focus is the game plan. Also, I suppose weve covered most of the retail parts.

If you look at size of business, which is the biggest business for you now

If you look at asset size, with Rs 95,000 crore as average AUM, asset management is clearly the biggest.

What is the progress on the asset reconstruction company

Its an interesting area, and the team is now in place.

These are interesting times for financial services. How do you see the challenges for your company

Earlier it was mainly investment and income related. Now the businesses have come to maturity. So now all the businesses have to now start delivering profits.

That is, from FY09

Yes, well have to start delivering.

What has been your experience at Reliance Capital Youve come from a different background

I think the canvas here is much broader. Its much more interesting. Its very challenging. Now, well have to make sure that every company delivers and makes profits. The delivery phase is now. Earlier, we were only focusing on growth. Now, itll have to be profits. And at the same time, the markets have become a lot tougher. Were actually in an inflation mode, and equity markets have been coming down.