Reliance Capital has recorded a three-fold increase in its net profit during the July-September period after excluding a one-time gain due to stake sale in its asset management company last year, says Sam Ghosh, group chief executive officer. In a conversation with Ira Dugal and Vishwanath Nair, Sam Ghosh outlines the quarterly performance and growth plans going ahead. Excerpts:

What has been the operational performance of the company during the quarter, barring the one-time gains?

Though we made a profit of R181 crore compared to last year, we have improved substantially, by taking out the one-time gain from the stake sale in the AMC. In terms of our consolidated total income at around R1,900 crore this quarter, even after removing the one-time capital gain, we have grown about 20% from the last quarter. From a business-by-business perspective, each of our businesses has performed substantially.

If you compare the business environment to the same quarter last year, conditions have deteriorated, except on the insurance side. Where have the gains come in from?

If you go business by business, our new business premiums in the life insurance business had been falling in the last 2-3 years. This is the first year where we have shown an increase in our new business premium, primarily on the traditional policy side, that is because we added 15,000-16,000 new agents in April, which has given us increased productivity. Plus, we have increased the average ticket size per policy. So, even though the number of policies may remain static compared to last year, the average ticket size is about R19,500 compared with R12,000-13,000 in the past.

In general insurance, we have grown mainly in the health segment. We picked up some business on the Rashtriya Swasthya Bima Yojna (RSBY) schemes, which has helped us grow our top line. On commercial finance, we find that our book is flat at R16,100 crore because of the market conditions. So, we focussed there to increase our net interest margins. We went for a more granular book, more small-ticket loans in the mortgages sector. On the mutual fund side, the good thing is that we have been able to gear up on the retail debt portfolios.

On the mutual fund business, the equity side of the business is usually more profitable than the debt. Is this a permanent shift that will impact margins?

The equity side is definitely more profitable than retail debt. But what we have focussed on is the retail debt side of the business because, on the equity side, folios have been coming down, customers have been getting out of the system. So, we consciously moved in to the retail debt segment over the last 18 months and that has paid off now.

How do you plan to grow your commercial finance business going ahead?

On the commercial finance side, we were in only 18 cities and, now, we are in about 37 cities. In the car loan business, we have slowed down considerably; we are not making any disbursals for cars. The commercial vehicle side of the business has shrunk to about 17-18% of the total portfolio, from 22-23% earlier. Going forward, our focus will continue on home loan and loan against property, and on SME.Of course, in the current market conditions, we do not want to grow in a big way. So, profitability may increase, but the AUM may not go up.

What is the asset quality situation like?

If you look at our NPA levels, our gross NPAs have been stable at around 2.3% and, if you look at commercial vehicles specifically, it would be slightly more than other segments. The other segment where there is a bit of stress is in loans to vendors who support infrastructure projects. We do not think our gross NPAs will go up in the next few quarters.