Ajay Srinivasan from Aditya Birla Financial Services talks about the new health arm and partnering with MMI Holdings

Aditya Birla Financial Services today launched its standalone health insurance arm, under Aditya Birla Health Insurance, which is a joint venture between the Aditya Birla Group and South African based MMI Holdings. Aditya Birla holds 51% in the health insurance business. ET Now spoke to Ajay Srinivasan, CEO of Aditya Birla Financial Services. Excerpts...

ET Now: Tell us about the joint venture.
Ajay Srinivasan: So this is a 51-49 joint venture with MMI of South Africa they are leading financial services player in South Africa and really what was most impressive when we went to see them was the innovative way in which they have been able to build out in the health insurance model. Now, the South African health insurance model market is actually quite different because you have to provide cover to everybody who applies for it and the price has to be the same and therefore there is a large amount of IP that has been built in terms of how you manage disease and how do you deal with somebody in terms of managing their health over a period of time. So it is a very unique approach to health insurance which really appeal to us, lot of similarities between Africa and here that we found that we could translate so it is a 51-49 joint venture with them.

ET Now: Health in that since has been a tough business when it comes to India as a market because of various reasons and we have very limited players who are on a standalone health business. What is going to be your business roadmap, in terms of the size of the market the market share that you are looking at and a typical say health business in a country like India, what would be the kind of timeline that you look for a break-even?
Ajay Srinivasan: Let me first talk about what is different about us. Most of the health insurance today is really like a mediclaim kind of policy, which is really around indemnity products which deal with reimbursement of claims and hospital claims. We want to change that experience, we want to first talk about insurance for all. We want to cover people who are traditionally not covered by the health insurance sector people who have pre-existing conditions who typically do not get cover healthy people who do not see their need to get cover because they say if I pay the premium what value do I get in return so the first differentiation is there are proposition is really going to appeal to all Indians. The second thing that we want to do is really partner with our customers through engagement through various forum so that we can help them manage their condition and this is what we do through an offering called incentivise wellness may be work with our customers to make sure that they are constantly improving their health because if they improve their health their claims go down it is good for them and it is good for us. So, it is good business for us and a very good outcome for our customers and our whole method of engagement is going to be a completely different model of engagement I think that is what is going to be different and when you talk about the industry being penetration being low one reason for that penetration being low is customers are not finding relevance in the industry compared to what they are looking for and that is what we are trying to address.

ET Now: If my numbers are right, this would be the 13th business vertical that you have entered on the financial services, you did mention the payments bank, how close are you to the launch?
Ajay Srinivasan: I think we are in the process of getting ready with the payments bank, we have got a number of things already set up our tech platform, our teams all in place. We are in the process of getting ready for launch so sometime in the first half of next calendar year you should see the launch of payments bank.

ET Now: Would the payments bank launch happened perhaps at a very interesting time that we are witnessing the whole of demonetisation which has been announced, how are you looking at things?
Ajay Srinivasan: It is indeed an interesting time, I think for payment banks particularly but definitely for financial services in general. I think the digitisation process will gather momentum with what has happened and I think we will be able to hopefully capture the growth of the whole movement to digitised currency and digitised payments through the payment bank. But I also see with the kind of money that is going to come into the system with the d;rop in interest rates withpotentially much stronger fiscal deficit I think you should see a much greater move to financial assets and that should benefit all the products and services that we have in Aditya Birla Financial Services.

ET Now: And from Aditya Birla Financial Services, do you think next couple of quarters would be challenging the business, impacts have started happening indeed and how do you see this lasting for?
Ajay Srinivasan: So I think it is early to make a complete assessment on timing and how broad the impact is going to be, we clearly see this quarter is going to be a quarter of adjustment, for a number of people is going to be a quarter of adjustment. It is difficult to forecast whether that will spill into the next quarter or not but I think it is going to be a bit of tough time for the various companies, especially in some sectors more than others before you start seeing a turnaround but I think you got to look beyond that because this is a great move and I think ultimately the benefits are going to be very very significant for India.

ET Now: Particularly are you seeing in the rural the effects being more and perhaps that is where a challenge, because you also have sent us across the country particularly the tier three, tier four segments so how challenging have been the things particularly in the last couple of weeks and are there any indication of things getting eased out with the kind of steps that have been taken in the last two-three days?
Ajay Srinivasan: We do not really have a pure rural presence like many other players do, we are in smaller towns through our life insurance business. We have seen some slowdown in collections initially, we have started seeing that coming back, renewal premium, some of that was paid in cash and saw a little bit of delay but again we started seeing some of that come back. So I think there so going to be a bit of a period of adjustment we do not know how long that period of adjustment will last before it comes back.

ET Now: How soon could we meet again the whole of restructuring process any u;pdate that you would like to give?
Ajay Srinivasan: So when we announce the restructuring in August we had said that the merger would get done in this financial year and then the de-merger of the financial services business would happen in the first quarter of next financial year. We are on track for that.

ET Now: So FY17 is when we can expect the whole process to be completed as scheduled?
Ajay Srinivasan: So FY17 the merger process will get completed and the demerger will happen in the first quarter of next fiscal.