aditya birla capital ltd share price Management discussions

OVERVIEW

Aditya Birla Capital Limited (ABCL) is the financial services platform of the Aditya Birla Group. Our Companys subsidiaries have established a strong presence across Protecting, Investing and Financing solutions. Powered by more than 34,000 employees, our businesses have a nationwide reach with 1,295 branches and more than 2,00,000 agents along with several bank partners.

Having built significant scale in the sectors in which they operate, the subsidiaries and associates collaborate closely to maximise synergy benefits and cross-selling. The diversified portfolio of products and services allows our subsidiaries and associates to leverage the extensive opportunities and possibilities in Indias financial services sector.

CONSOLIDATED PROFIT & LOSS

			(_ Crore)
Profit & Loss Statement	FY21	FY22	FY23
Revenue	19,254	22,230	27,416
Profit Before Tax (before share of profit/(loss) of Associates and JVs	1,277	1,769	2,624
Add: Share of profit/(loss) of associate and JVs	268	341	273
Profit before tax	1,546	2,110	2,896
Less: Provision for taxation	440	610	811
Less: Minority Interest	(21)	(46)	28
Profit aƒer tax	1,127	1,545	2,057
Gain on Sale of AMC stake (net of tax)	-	161	-
Fair value gain1	-	-	2,739
Reported Profit Aƒer Tax	1,127	1,706	4,796

 

1 Aditya Birla Health Insurance ceased to be a Subsidiary and was accounted as a joint venture post preferential allotment of equity shares to Platinum Jasmine A 2018 Trust, acting through its trustee, Platinum Owl C 2018 RSC Limited, being a wholly owned Subsidiary of Abu Dhabi Investment Authority ("ADIA")

ADITYA BIRLA FINANCE LIMITED _NBFC_

Aditya Birla Finance Limited (ABFL) is among Indias leading private and diversified Non-Banking Financial Companies (NBFCs), offering end-to-end financing and wealth services to a wide range of customers across the country. ABFLs product portfolio meets the varied financial requirements of a wide range of customers, such as the salaried and self-employed individuals, High Net-worth Individuals (HNI), ultra HNIs, micro-enterprises, Small and Medium Enterprises (SME), and large and mid corporates.

INDUSTRY OVERVIEW

In FY23, systemic credit showed strong growth on the back of pent-up retail demand from sectors such as housing and auto. Credit demand also grew due to strong demand from NBFCs and the trade segment. Overall credit grew by an estimated 13.3% and systemic retail credit by 19.2%. NBFCs have shown remarkable resilience and have gained prominence in the financial sector ecosystem. Their share in the overall credit pie increased to 18% in fiscal 2023 from 12% in fiscal 2008. Over the years, NBFCs have consolidated their position as a key intermediary in the Indian financing sector with differentiated offerings such as niche financing, last-mile connectivity and an alternative to bank financing. With respect to liabilities, NBFCs have become increasingly interconnected with the financial system. The COVID-19 pandemic, the consequent acceleration in the adoption of technology and change in consumer habits, and the increasing availability of data for credit decision-making have supported the further acceleration of retail credit growth. Revival of economic activity, pent-up demand, strong export, and domestic support have strengthened credit growth in the MSME segment. The market share of NBFCs in outstanding MSME loans (including LAP) was 25% in FY 2022 and is estimated to have increased to 27% in FY23. In terms of growth, NBFCs witnessed a CAGR of 21% between fiscals 2017 and 2023, compared to 8% for other players. Going forward, NBFCs are expected to continue to witness rapid growth and increase their market share in this segment.

PERFORMANCE REVIEW

The overall Assets Under Management (AUM) of ABFL grew 46% y-o-y to _80,556 Crore on 31^st March, 2023 driven by growth across retail, SME and HNI segments. AUM of retail, SME and HNI segments grew 57% y-o-y. The proportion of AUM of retail, SME and HNI segments increased from 62% as on 31^st March, 2022 to 67% as on March 31^st 2023. Total disbursements doubled y-o-y to _49,223 Crore in FY23. Total secured and unsecured business AUM grew by 36% y-o-y to _40,353 Crore as on 31^st March, 2023. In the secured business loans segment, which majorly comprises loan against shares, lease rental discounting, loan against property and working capital solutions to self-employed individuals and MSMEs, disbursements increased by 71% y-o-y to _16,766 Crore in FY23. Secured business loan book increased 31% y-o-y to _31,944 Crore as on 31^st March, 2023. In the unsecured business loans segment, which comprises supply chain financing and overdraft facilities to MSMEs and self-employed individuals, disbursements grew by 83% y-o-y to _4,468 Crore in FY23. Unsecured business loan book increased by 57% y-o-y to _8,409 Crore as on 31^st March, 2023. The personal and consumer portfolio, which comprises check-out financing through digital partnerships for point-of-sale purchases and Personal loans, was _15,442 Crore as on 31^st March, 2023, grew almost 3x the portfolio as on 31^st March, 2023. Disbursements of _15,263 Crore in the personal loans and consumer loan portfolio in FY23 was more than four times the disbursements in FY22. The mid and large corporate loan portfolio, which comprises structured financing, project financing, developer financing, working capital loans and terms loans to well-established corporates, loan book increased by 23% y-o-y to _24,761 Crore as on 31^st March, 2023. Disbursements in the corporate and mid-market segments increased by 60% y-o-y to _12,726 Crore in FY23.

We diversifed product portfolio

The overall active customer base grew by 57% y-o-y to 5.7 million as on 31^st March, 2023. To expand reach and distribution, ABFL added 164 branches in the fiscal year 2023, taking the branch count to 323 as on 31^st March, 2023. The net interest income (including fee income) saw a 43% increase y-o-y to _4,410 Crore in FY23, driven by strong loan growth and expansion in net interest margin. The net interest margin (including fees) increased by 60 basis points to 6.84% in FY23, supported by an increase in proportion of higher yielding personal, consumer and business loans and increase in lending rates, offset in part by a rise in borrowing costs. ABFL has strong funding access with an adequate surplus and diversified borrowings mix, and this has helped optimise the cost of borrowing in a rising interest rate environment. The cost of borrowings increased by 37 basis points to 7.25% in FY23 despite a 250 basis points increase in repo rates. Operating expenses increased by ~50% y-o-y to _1,417 Crore, driven by increase in branches, costs incurred towards growing the personal, consumer, micro-enterprises and SME business and technology and digital-related expenses. The cost-to-income ratio was 32.1% in FY23. The pre-provisioning operating profit increased by 40% to _2,994 Crore in FY23. Credit provisions increased by 38% y-o-y to _903 Crore in FY23. The credit cost (provisions as a percentage of average advances) was 1.43% in FY23 compared to 1.36% in FY22. The Profit Before Tax increased by 41% y-o-y to _2,090 Crore in FY23. The Profit Aƒer Tax increased by 40% y-o-y to _1,554 Crore in FY23. The Return on Assets increased by 15 basis points y-o-y to 2.45% and Return On Equity increased by 289 basis points y-o-y to 14.76% in FY23.

The total capital adequacy ratio was about 16.4% as on 31^st March, 2023 and Tier 1 ratio at 13.9%. ABFLs total equity expanded by 16% y-o-y to _11,426 Crore as on 31^st March, 2023. ABFLs exposure is diversified across sectors, customer segments and products. About 70% of the AUM as on 31^st March, 2023 was secured (including 5% through

Government Guarantee Scheme). Gross Stage 2 loans declined by 269 basis points to 2.7% as on 31^st March, 2023. Gross Stage 3 loans declined by 46 basis points to 3.12% as on 31^st March, 2023. The provision coverage on gross stage 3 loans increased from 39.5% as on 31^st March, 2022 to 46.2% as on 31^st March, 2023.

Improving asset quality trends

Particulars	Mar21		Mar22		Mar23
	%	J Crore	%	J Crore	%	J Crore
Stage 1	89.55%	43,537	91.02%	49,770	94.16%	75,758
Stage 2	7.53%	3,659	5.41%	2,956	2.72%	2,187
Stage 3	2.93%	1,422	3.58%	1,956	3.12%	2,507
Stage 2 and 3	10.45%	5,082	8.98%	4,912	5.84%	4,695
Total Loan book	100%	48,618	100%	54,682	100%	80,452
Stage 3 PCR	41.5%		39.5%		46.2%

ABFLs Asset Liability Management (ALM) is optimised for both liquidity and cost. As on 31^st March, 2023, ABFL had an accumulated surplus up to a one-year time frame from the ALM perspective. We raised _31,678 Crore long-term borrowing during FY23. Of the total liabilities, 38% have fixed rates and 62% have floating rates. Of the total assets, 39% have fixed rates and 61% have floating rates. Our long- term funding facilities were rated AAA and short-term funding facilities were rated A1+ by India Ratings, ICRA and Care Ratings. In terms of liquidity, there is significant availability to meet obligations, even under severe stress conditions.

Well matched ALM and diversified borrowing mix

ABFL follows a digital-first approach for product innovation, customer selection, seamless onboarding and improving service delivery. It has built an agile plug-and-play API tech-stack that facilitates seamless integration with a diverse set of ecosystem partners and drives digital sourcing at scale. These tech capabilities have helped drive exponential volume growth for ABFL. While these initiatives will continue to be significant growth drivers for the retail segment, ABFL is also focusing on growing its secured and unsecured business loan portfolio. During FY23, it launched Udyog Plus, a comprehensive platform that provides MSMEs lending and value-added services to manage and grow their business. The platform enables cash-flow linked financing by using alternate data such as Goods and Services Tax (GST) returns and transaction data in addition to traditional data sources to improve turnaround times and customer experience. It offers a paperless digital journey for business loan sanction. Other value-added services include Protecting, Investing, Financing and Advising (PIFA) solutions designed to cover a full ecosystem of promoters, owners, directors and authorised signatories (PODS) of MSME customers. Udyog Plus is integrated with the government and private ecommerce websites via Open Credit Enablement (OCEN) and other e-commerce platforms to provide credit facilities to sellers on these platforms.

OUTLOOK

The credit demand is expected to grow with reducing uncertainty and investment traction going forward. Credit growth of NBFCs is expected to be driven by rising retail consumerism, formalisation of MSMEs, increasing financial penetration and investment focus on Indias manufacturing sector. ABFL will focus on building a granular franchise and lending to retail, SME and HNI customers. In the business loans segment, differentiated offerings for MSMEs and will leverage Udyog Plus platform to acquire new customers, tap into the ABG ecosystem, focus on ecommerce partnerships and integrate with public infrastructures such as OCEN and ONDC to grow the loan portfolio. In the personal and consumer loan segment, ABFL will deep-mine the existing customer base acquired through digital ecosystems using analytics and drive cross-selling and upsell through scorecard-based Straight Through Process (STP) journeys. Through tie-ups with new partners, ABFL plans, to diversify its digital ecosystem sourcing mix in personal loans and aims to introduce new products such as education loans and two-wheeler loans to increase the wallet share among customers.

Key Financial			(_ Crore)
Profit & Loss Statement	FY21	FY22	FY23
Net Interest Income (Incl. fee income)	2,508	3,088	4,410
Operating expenses	795	947	1,417
Credit provisioning	682	653	903
Profit before tax	1,031	1,487	2,090
Tax	263	379	536
Profit aƒer tax	769	1,108	1,554
Total equity	8,838	9,860	11,426
			(%)
Key Ratios	FY21	FY22	FY23
Average yield (Incl. Fee Income)	11.69	11.72	12.76
Interest cost/Avg. Lending book	6.35	5.48	5.92
Net Interest Margin (Incl. Fee Income)	5.34	6.24	6.84
Opex/ Avg. Lending book	1.72	1.97	2.24
Cost-to-income Ratio	31.67	30.67	32.12
Credit Provisioning/ Avg. Lending book	1.48	1.36	1.43
ROA	1.67	2.30	2.45
ROE	9.18	11.87	14.76
Debt-to-equity	4.66	4.66	6.19
Capital Adequacy (CRAR)	22.70	21.77	16.38
Tier-1 ratio	18.43	18.07	13.92

ADITYA BIRLA HOUSING FINANCE LIMITED _HOUSING FINANCE_

Aditya Birla Housing Finance Limited (ABHFL) is registered with the National Housing Bank as a housing finance company under the National Housing Bank (NHB) Act, 1987. ABHFL offers a comprehensive range of housing finance solutions, such as Home loans, Home Extension Loans, Plot and Home Construction Loans, Home Improvement Loans, Loans Against Property, Construction Financing, and Commercial Property Purchase Loan.

INDUSTRY OVERVIEW

The Indian housing finance market clocked a healthy ~12% CAGR (growth in loans outstanding) over fiscals 2018 to 2023, on account of rising disposable incomes and government steps, such as interest rate subvention schemes and fiscal incentives in disposable incomes, healthy demand specially from Tier 2 and 3 cities, and greater number of players entering the segment. Housing credit-to-GDP remains quite low compared to developed countries but demand for affordable housing continues to remain strong and the government has implemented various initiatives to incentivise individuals and developers. Credit growth momentum is expected to continue for HFCs, supported by increasing penetration beyond tier 1 locations, rising urbanisation and sustaining affordability.

PERFORMANCE REVIEW

ABHFLs disbursements increased by 42% y-o-y to _5,300 Crore in FY23. Our focus continues to be on achieving a high quality of origination. About 95% of disbursements were to customers with a CIBIL score of more than 700 or new-to-credit customers. Our loan portfolio grew by 14% y-o-y to _13,808 Crore as on 31^st March, 2023. Of the total loan portfolio, prime segment was 51%, affordable segment was 41% and construction finance was 8% as on 31^st March, 2023. The average ticket size of the ABHFL loan book was _25 Lakh as on 31^st March, 2023.

Net interest income including fee income grew by 27% y-o-y to _659 Crore in FY23 driven by expansion in net interest margin (including sourcing costs) and loan growth. Net interest margin including fee income expanded by 76 basis points to 5.08% in FY23. The increase in net interest margin was linked to the increase in proportion of higher yielding affordable segment and construction finance and increase in lending rates, offset in part by an increase in cost of borrowings. The operating expenses increased by 44% y-o-y to _278 Crore in FY23 driven by increase in branches, costs incurred towards growing the business and digital and technology expenses. Cost-to-income ratio increased from 37.1% in FY22 to 42.2% in FY23. Pre-provision operating profit increased by 16% y-o-y to _381 Crore in FY23. Credit provisions were _72 Crore in FY23, compared to _75 Crore in FY22. Credit costs (provisions as a percentage of average advances) were 58 basis points in FY23 compared to 65 basis points in FY22. Profit Aƒer Tax grew 22% y-o-y to _241 Crore in FY23. Return on Equity was 13.16% and return on assets was 1.94% in FY23.

ABHFLs Assets Liability Management (ALM) is optimised for both liquidity and cost. As on 31^st March, 2023, ABHFL accumulated surplus up to a one-year time frame from the ALM perspective. Of the total liabilities, 24% have fixed rates and 76% have floating rates. Of the total assets, 92% have floating rates and 8% have fixed rates. ABHFLs long-term funding facilities were rated AAA India Ratings and ICRA.

The total capital adequacy ratio was 21.6% as on 31^st March, 2023 as against the minimum requirement of 15% as per RBI guidelines. ABHFLs net worth expanded by 14% y-o-y to _1,968 Crore as on 31^st March, 2023.

ALM optimised for liquidity and costs (on 31st Mar 2023) (%)

OUTLOOK

The housing market continues to witness an upward trend in the number of first-time homebuyers and those moving up the property ladder by opting for larger homes or acquiring homes in another location. Given the low mortgage to GDP penetration in India, there is immense scope to expand the mortgage market in India. Going forward, ABHFL will focus on growth in both prime and affordable segments with an average ticket size of _20-30

Lakh. Growth will be augmented by the ABG ecosystem. ABHFL will drive data analytics and digital capabilities for seamless customer onboarding and servicing. It has recently launched a digital platform for end-to-end reinvention of loan life cycle. Through this platform, we will design assisted/ DIY customer journeys with effective lead management. It will also lead to the seamless onboarding of distributors and significantly reduce the turnaround time for customers.

Key Financial
			(_ Crore)
Profit & Loss Statement	FY21	FY22	FY23
Net Interest Income (Incl. fee income)	434	521	659
Operating expenses	170	193	278
Operating profit	264	328	381
Credit provisioning	88	75	72
Profit before tax	176	253	309
Tax	39	56	68
Profit aƒer tax	137	197	241
Net Worth	1,519	1,721	1,968
			(%)
Key Ratios	FY21	FY22	FY23
Effective Interest rate (EIR)	10.28	10.24	10.91
Net Interest cost/Avg. Loan book	7.11	5.92	5.84
Net Interest Margin (Incl. Fee Income)1	3.18	4.32	5.08
Opex/Avg. Loan book	1.42	1.69	2.24
Cost-to-income Ratio	39.17	37.11	42.21
Credit Provisioning/ Avg. Loan book	0.73	0.65	0.58
ROA	1.15	1.72	1.94
ROE	9.53	12.26	13.16
Debt-to-equity	7.03	6.03	6.07
Total CRAR	21.73	23.94	21.58
Tier-1	17.09	19.44	18.01
1

ADITYA BIRLA SUNLIFE ASSET MANAGEMENT COMPANY LIMITED _ASSET MANAGEMENT_

Since 1994, Aditya Birla Sun Life AMC Limited (ABSLAMC) has been one of Indias leading Asset Management Companies. We cater to a diverse customer cross-section by offering a wide variety of investment solutions focused on regular income, wealth creation and tax savings, among others. ABSLAMC is ranked as the largest non-bank affiliated Asset Management Company (AMC) in India based on quarterly average AUMs (excluding ETFs).

INDUSTRY OVERVIEW

In FY23, on account of volatile market conditions, the mutual fund industry witnessed muted growth. Net equity sales of _1.3 Lakh Crore was recorded in FY23 through new fund offerings and existing funds. Within the existing equity categories, sectoral/thematic, small-cap, mid-cap, large and mid-cap and flexi cap funds saw the highest net inflows.

The industry Average Assets Under Management (AAUM) for the quarter ended on 31^st March 2023 reached _40.49 Lakh Crore, a growth of 6% over the same period last year. The corresponding AAUM for the quarter ended 31^st March 2022 was _38.36 Lakh Crore.

Industry Equity AAUM was at _20.75 Lakh Crore for the quarter ended 31^st March 2023, growing by 11% over the same period last year. Corresponding Equity AAUM for the quarter ended 31^st March 2022 was _18.64 Lakh Crore.

As on 31^st March 2023, the total number of mutual fund investors stood at 14.76 Crore versus 13.12 Crore on 31^st March 2022, an increase of 12% y-o-y.

The retail investor surge is also reflected in higher industry individual Monthly Average AUM (MAAUM) at _23.27 Lakh Crore, which grew 12% y-oy and contributed to around 58% of the total MAAUM. The overall mutual fund monthly average AUM for March 2023 from B30 cities (beyond the top-30 cities) was at _6.84 Lakh Crore, which was 17% of the overall AUM.

PERFORMANCE OVERVIEW

For the quarter ended 31^st March 2023, our Companys Mutual Fund Quarterly Average Assets under Management (QAAUM) was at _ 2,75,204 Crore with market share (excluding ETF) at 7.7% and Mutual Fund Equity QAAUM was at _ 1,15,827 Crore with market Share at 5.6%. Equity mix was at 42.1%. The company has a dominant position in the fixed income space with QAAUM of

_ 1,59,377 Crore with market share at 10.6%. The closing mutual fund AUM as on 31^st March, 2023 was _ 2,62,292 Crore. For the quarter ended 31^st March, 2023 our Alternate assets AUM which include AIF/PMS, offshore and real estate was at _ 10,976 Crore. The Profit Before Tax for FY23 was _ 794 Crore and Profit Aƒer Tax (PAT) stood at _ 596 Crore in FY23.

Focus on growing the SIP book

Systematic Investment Plan (SIP) is a popular mode of investment for retail investors. As one of the key industry players, ABSLAMC has been proactive with initiatives to increase traction in SIPs. Its constant endeavour has been to build our SIP book size and ensure customer stickiness, while creating long-term value for investors. To achieve this, we launched several initiatives, such as ‘Har Ghar SIP, Multi-SIP, Turbo STP, Pro Portfolio and Perquisite SIP targeting employees of mid-size corporates. Through these initiatives, the Systematic Investment Plan (SIP & STP) book crossed the _1,000 Crore mark. ABSLAMC increased the SIP & STP book by 12% from _895 Crore in March 2022, to _1,003 Crore in March 2023.

Increasing retail franchise with a focus on B30 Market

Over the last few years, we have dedicated our efforts to expanding our retail franchise and capturing a larger market share from B30 cities. Our Company has expanded its pan-India presence to 290+ locations, with over 80% being in B30 cities. Individual MAAUM in March 2023 was _1,40,303 Crore, vis-?-vis _1,38,019 Crore in March 2022. The Institutional MAAUM size was at _1,27,220 Crore in March 2023 vis-?-vis _1,50,612 Crore in March 2022. The B30 MAAUM was at _44,846 Crore in March 2023 compared to _45,982 Crore in March 2022.

Customer acquisition

Customer acquisition continues to be a key focus area for our Company. ABSLAMC added around 0.7 million new folios in FY23 and, with this, our overall folio count increased to 8.05 million as on 31^st March 2023.

Multi-channel distribution network strategy

As part of its overall strategy, the Company is focusing on building the retail sales segment across T30 (top 30-cities) and B30 markets. ABSLAMC has been strengthening its multi-channel sales ecosystem and distribution network by bringing together the key levers of Emerging Markets, Virtual Relationship Manager, Sampark, Service to Sales, Cross Sell and Up Sell, Direct Channel and Digital Sales. Our Companys multi-channel market initiatives aimed at deepening its presence have yielded positive results. With Emerging Markets (EM), the aim is to tap into potential rural markets at an early stage to build growth early on. The Company strives to increase traction through various initiatives like investor education programmes and distributor engagement and training. Currently, 70+ EM locations have been converted into branches since initiation. The Virtual Relationship Manager (VRM) provides virtual assistance and guidance to Mutual fund distributors, with a primary focus on increasing activations, SIPs and gross sales. Under the VRM model, the Company has 2,900+ active distributors as on 31^st March, 2023. Currently, the model operates across 16 touch points in India. The Companys distribution expansion initiative, ‘Sampark, empanels and onboards new distributors. It has simplified distributor empanelment with a one-click, end-to-end digitally enabled journey. Through this initiative, the Company has empanelled 9,000+ distributors. Customer Service remains a key focus for us as it enables us to build deeper engagement with investors. Service Relationship Managers engage effectively with investors and facilitate their investment decisions. They identify opportunities for winning back, retention and upselling. Currently, the Company has deployed around 230 trained personnel as a single point of contact for guiding and servicing investor needs.

Distribution strength

In FY23, the Company expanded its pan-India network of empanelled distributors to 72,000+ KYD- compliant MFDs, 270+ National Distributors and 80+ banks and financial intermediaries. We continue to expand our distributor base and have empanelled 9,000+ new MFDs in FY23.

Scaling the passive and alternate assets business

During the year, the passive product offering yielded positive results wherein the Companys assets grown close to 3 times, from _9,962 Crore in March 2022 to _28,223 Crore in March 2023. The existing product suite was expanded to 40+ products, with 7 new passive products in the pipeline. The customer base in this category has now grown to 4,96,000 folios.

Alternate assets business

The Company continues to build future capabilities by creating differentiated products in AIF/PMS, Offshore, and Real Estate offerings to address the growing needs of HNIs and family offices. During the year, we launched and raised a commitment of _734 Crore in India Equity Services Fund (CAT III AIF) and received SEBI clearance for three funds, namely ABSL India Special Opportunities Fund, ABSL India Equity Innovation Fund, ABSL Structured Opportunities Fund.

On the real estate front, the Company successfully completed thefirst close of Aditya Birla Real Estate Credit Opportunities Fund (Category II AIF) and also deployed the first investment. Due diligence has been completed for one more deal.

In order to serve the large pool of NRI and global investors, the Company has received in-principle approval from the International Financial Services Centres Authority (IFSCA) to launch ‘India ESG Engagement Fund domiciled in GIFT City in April 2023. This will help the Company deliver on the growing needs of the individuals who are keen to invest in India through investments in dollar-based India funds.

Focus on investment performance with a robust risk management framework

The Company is committed to consistent investment performance and we are supported by our stable and experienced investment team with extensive industry experience.

The Company has a robust risk management framework that monitors firm-wide governance, risk and compliance. The Companys risk management systems and procedures demonstrate our commitment to working ethically and functioning profitably while maintaining compliance with best practices and applicable laws, rules, and regulations. These are intended to provide assurance against material misstatements or loss, as well as to ensure the safeguarding of assets, the maintenance of proper accounting records, the reliability of financial information, and the identification and management of business risks.

OUTLOOK

ABSLAMC has been a leading investment manager that has committedly worked towards achieving financial inclusion, deepening financial markets and developing the mutual funds industry. The Companys strategy remains rooted in its customer-first ethos and our commitment to serve investors over the long term by providing holistic investment solutions and consistent investment performance. With a steadfast commitment to investor interests, the primary focus is on customer experience through a strong risk management and governance framework, research-backed fund management and technology-backed service delivery. This commitment has helped the Company to build its AUM size over the years, as well as develop a robust customer base. While these fundamental principles have enabled ABSLAMC to establish itself in the mutual fund space, they will also guide it towards accelerated growth in the alternative assets space.

ADITYA BIRLA SUN LIFE INSURANCE LIMITED _LIFE INSURANCE_

Aditya Birla Sun Life Insurance Company Limited (ABSLI) is a 51:49 joint venture between the Aditya Birla Group and Sun Life Financial Inc., Canadas leading international financial services organisation. ABSLI has contributed immensenly to the growth and development of the Indian life insurance industry, and is currently one of Indias leading private life insurance companies.

INDUSTRY OVERVIEW

During FY23, the weighted individual new business premium in the life insurance industry grew by 19% y-o-y to _1,040 billion of in FY23 from _876 billion in FY22. Private insurers grew by 24% y-o-y and Life Insurance Corporation (LIC) of India recorded a growth of 9% y-o-y.

The Group new business premium grew by 20% y-o-y to _2,260 billion in FY23 from _1,890 billion in FY22. Private insurers grew by 17% y-o-y; LIC of India recorded a growth of 20% y-o-y dominating the line of business at 77% mindshare.

The individual product mix for private players has been broadening from market-linked products historically to non-linked products offering guaranteed savings, pure life protection, participating products, and rising share of annuities to tap new segments of customers. Diversification within savings products, driven by product innovation, changing customer preferences and evolving regulations, has resulted in private life insurers shiƒing focus from a largely unit-linked dominated product mix to a more diversified one. The pandemic also heightened awareness regarding the importance of insurance and long-term wealth creation, prompting further diversification in the savings segment.

Over the last few years, private insurers have strengthened their efforts in the under-penetrated protection segment. Focus on the retirement space has also increased, given the market opportunity. In FY2023, there was a significant shiƒ towards traditional business for private players, with a focus on non par savings and protection. Both these segments were popular in FY23, given the fact that there is hardly any substitute for long-term insurance products that addresses the risk of loss of life (term protection) and risk of loss of income/longevity risk (annuities, guaranteed products). This is also accentuated by the fact that in uncertain times, people prefer to have certainty when it comes to their savings. New alternatives like return of premium products, value-added riders and combo products are getting launched. These additions, combined with awareness campaigns, are expected to liƒ growth in the retail protection segment. On the distribution mix front, there has been a distinct shiƒ with Bancassurance emerging as the primary distribution channel among private sector insurers. This shiƒ is driven by the captive customer base and by leveraging the widespread network of bank branches. Currently, with the use of analytics and automated underwriting, insurance companies are collaborating with banks to provide customised offers, which are then integrated into bank systems to create a differentiating factor and improved experience for the customer.

Life insurance companies continue to focus on digital and direct channels given the tremendous growth potential. There has been an increase in the number of web aggregators in the recent years, and several insurance companies have demonstrated a growing interest in listing their products on aggregator portals and websites.

PERFORMANCE REVIEW

ABSLI recorded individual first-year premium (with Single premium @10%) growth of 37% y-o-y to _3,023 Crore in FY23, which was significantly higher than private players growth of 24% y-o-y and industry growth of 19% y-o-y. ABSLIs market share in the individual first year premium among private players increased to 4.4% in FY23 from 4.0% in FY22. The group business grew by 30% y-o-y from _3,223 Crore in FY22 to _4,189 Crore in FY23. ABSLIs market share in the group new business among private players rose to 7.9% in FY23 from 7.2% in FY22. The overall renewal premium grew 14% y-o-y to _7,397 Crore in FY23, of which 77% was collected digitally. The total gross premium grew by 24% y-o-y to _15,070 Crore in FY23. In FY23, ABSLI registered strong growth in both Partnership and Proprietary channels with a balanced sourcing mix of 60:40, respectively. It continued this journey of balanced channel strategy with a pan-India presence in more than 3,500 cities, through over 15,500 bank branches, over 340 own branches and more than 64,000 agents.

In line with Industry, the Company has also revised its product mix strategy, reducing the contribution of ULIP products in the overall topline with a shiƒ to non-Par products. It has also helped the Company to generate higher margins. ABSLI launched five products in the guaranteed space with a new Par product with industry-best features. The new products launched in last 12 months contributed to 27% of the overall Individual first year premium for FY23. The ULIP mix saw a reduction in both Proprietary and Partnership channels at 18% & 17% respectively in FY23.

All term policies are 100% medically underwritten to ensure quality of business undertaken. Also, to protect policyholders guaranteed benefits in low-interest-rate scenarios, we have entered into Forward Rate Agreements (FRA) to protect 100% expected maturity and survival benefits.

The value of new business is one of the most important metrics in the life insurance industry and it measures profitability over the long term. ABSLI has achieved the highest-ever Net Value of New Business (VNB) margin at 23%, with an increase of 801 basis points y-o-y from 15% in FY22. The embedded value increased 18.5% y-o-y to _9,014 Crore as on 31^st March, 2023, from _7,609 Crore as on 31^st March, 2022. ABSLI reported a healthy Return on Operating Embedded Value (RoEV) at 22.6%.

2. The methodology, assumptions and the results of base EV and VoNB have been reviewed by Willis Towers Watson Actuarial Advisory LLP

Net Profit Before Tax³ grew 12% y-o-y at _196 Crore. The solvency margin was at 1.73 times as on 31^st March, 2023, against the regulatory requirement of 1.5 times.

Adopting a digital mindset

Keeping pace with new technology is essential for any organisation focusing on faster deliveries, reduced spending, and enhanced customer experience. The three-to-five-year digital transformation plan depends on creating a culture of continuous learning and required that employees develop a digital mindset.

Higher digital adoption by customers and distributors requires insurers to develop strong technological capabilities and highly efficient platforms, which are powered by analytics, automation, and Artificial Intelligence. Seamless integration of these platforms and processes with the partners systems is necessary. Customers expectation of personalised and improved service experience can be addressed using AI, cloud computing, Machine Learning algorithms and bots.

 

3 Consolidated nos. including Aditya Birla Sun Life Pension Management Company Limited

ABSLI has adopted end-to-end digitalisation. The Company has digitalised its front-end and back-end processes, covering all the major milestones of the policy life cycle. It has customer acquisition assets like Pre-Sales App for Lead Generation Management, Prospective App Sales buddy for assisting advisors, E-App for managing new business digitally, and more. It has automated an AI-driven underwriting system which enables it to auto underwrite policies and acts as an aid to intelligence for acquiring new risk consciously.

OUTLOOK

Going forward, ABSLI will increase its traditional product offerings, including protection in retail segment and focus on growing credit life in group segment. The Company will also continue to make investments in direct channels and PSU relationships to grow mindshare. The aim will be to improve persistency across cohorts and strengthen underwriting by using Artificial Intelligence and Machine Learning. Increasing the share of Proprietary business and agency capacity to drive growth will be a key priority of our Company.

Key Financial
			( in Crore)
Profit & Loss Statement	FY21	FY22	FY23
Individual first year premium	2,076	2,442	3,484
Group first year premium	2,488	3,223	4,189
Renewal premium	5,212	6,475	7,397
Total gross premium	9,775	12,140	15,070
Operating expenses (Excl. commission)	1,362	1,548	2,142
Profit before tax1	151	175	196
Profit aƒer tax1	102	117	129
1 Consolidated nos. including Aditya Birla Sun Life Pension Management Company Limited
			(%)
Key Ratios	FY21	FY22	FY23
Opex to premium (excluding commission)	13.9	12.7	14.2
Opex to premium (including commission)	19.1	17.4	19.5
Solvency ratio	180	188	173

ADITYA BIRLA HEALTH INSURANCE CO. LIMITED _HEALTH INSURANCE_

Aditya Birla Health Insurance Co. Limited (ABHI) is a Standalone Health Insurance player (SAHI). It was incorporated in 2015–a collaboration between Aditya Birla Capital Limited (ABCL) and MMI Strategic Investments (Pvt) Ltd. holding 51% and 49% shares, respectively. ABHI commenced its operations in October 2016 and is engaged in the business of providing health insurance. In FY2023, ABHI successfully completed a preferential allotment of equity shares to Platinum Jasmine A 2018 Trust, acting through its trustee, Platinum Owl C 2018 RSC Limited, being a wholly owned Subsidiary of Abu Dhabi Investment Authority ("ADIA") for an aggregate consideration of _664.27 Crore. Post completion of the transaction, stake of ABCL, MMI and ADIA in ABHI are 45.91%, 44.10% and 9.99% respectively. We are the fastest- growing SAHI player, with differentiated core offerings like incentivised wellness which reward health-conscious behaviour, with industry-first 100% return of premium (HealthReturnsTM) along with a differentiated health and wellness framework.

INDUSTRY OVERVIEW

Industry performance

Indias health insurance industry has seen significant growth in recent years, driven by the rising awareness about the need for health insurance, rising healthcare costs, and government initiatives to promote insurance coverage. The General Insurance industry has been growing at a 3-year CAGR of 11% in FY23, while the health insurance industry grew by 21% y-o-y to _97,681 Crore in FY23. The industry is expected to see this growth momentum continue, driven by a growing middle class, increasing life expectancy, and rising healthcare costs. The Government of India also has a significant role to play in the health insurance industry. It has launched initiatives such as Ayushman Bharat, a programme that has helped increase insurance coverage among the lower-income population and has also created opportunities for both SAHIs and general insurance companies (GIC) to expand their market share. The government has also embarked on a mission of "Insurance for All" by 2047. As the government transitions from being a provider of health services to a funder of health services, the growth of the health insurance sector is imperative in the short and medium term. New products and innovations in currently unfunded areas are also expected to pick up growth momentum.

Industry structure

The health insurance industry in India consists of 29 players, of which 5 are standalone health insurance companies (SAHI) monoline companies that offer only health insurance–and 24 multiline general insurance companies (GIC) that offer health insurance along with other insurance products such as fire, marine, motor and liability, among others. The GICs comprises of 20 private players and 4 government-owned players. The gross premium of SAHI players increased by 26% y-o-y, government GICs increased by 16%, and private GICs increased by 25% y-o-y in FY23. The market share of SAHI players in the Health Insurance segment was 27%, while those of private GICs and government-owned GICs were 31% and 42% respectively in FY23. The market share of SAHI players increased by 94 basis points in the year. Health Insurance has the following broad customer segments: i) Group segment for Corporates with a share of ~ 48% dominated by public sector undertakings (PSU) insurers; ii) Retail segment with a share of ~ 43%, which has seen relatively higher growth, and iii) Government segment with a share of ~ 9% of the industry.

INDUSTRY OUTLOOK AND OPPORTUNITY

The Indian health insurance industry is undergoing a digital transition as an outcome of technology adoption across different sectors. The adoption and application of AI and ML have drastically improved various facets of the industry. New digital technologies are changing the way customers interact with insurers. The regulator is also leading the digital push with the proposed a one-stop Portal for digital policy sales (Bima Sugam). The portal is on the lines of a marketplace with the consumers, distributors, and manufacturers coming together at one place. This is expected to bring more transparency and choice to the consumer in the long run and will help attract more consumers leading to lower distribution costs. Health insurance continues to be one of the fastest growing segments in the entire General insurance space. The high growth potential and richer valuations have prompted GI players to increase investments in the health space. Leading GI players continue to invest in the health insurance sector through higher investments in the Agency channel. The digital players are also expected to increase their focus in this sector. Health insurance penetration in the country is still at a minuscule level due to limited reach, and lack of awareness and education.

This consequent burden is borne by people themselves, and they are not covered by any government or private health insurance scheme. Owing to high demand, public and private players are increasing their offerings and improving the quality of service, to dominate the market. The players are focusing on scaling up their businesses and portfolios to address the high potential of the market. Digital innovations, new product and customer segments and efficient provider networks will continue to drive health insurance growth in the country.

DIFFERENTIATED BUSINESS MODEL AND APPROACH

ABHIs business model is driven by the ‘Health First approach, differentiated core offerings and health data-based risk interventions and hyper-personalisation.

‘Health First approach: ABHIs purpose is to ‘Empower and motivate families to prioritise their health and live fulfilling lives. As a new-age player in the health insurance industry, ABHIs focus has been to attract relatively health-conscious customers with unique ‘wellness-based product proposition that incentivises customers to maintain good health and staying fit. To achieve this, ABHI has created a unique Health First business model that focuses on ‘buy and engage, which aims to involve policyholders through health and wellness interactions; influence policyholders to lead healthier lifestyles by rewarding good health through industry-first 100% return of premium, while also funding healthcare expenses. The company with customers consent collects 360^o health data to generate a unique well-being score. This model is strengthened via a wellness ecosystem and care manager-led model that ensures a seamless claims process.

Differentiated core offerings: ABHI offers a wide range of wellness programmes and incentives that encourage policyholders to adopt healthy habits. The differentiated core offerings are centred around incentivised wellness to reward customers for practising good health behaviours. ABHI HealthReturns^TM programme, an industry-first offerings of up to 100% return of premium, has been well-received in the market. It offers a comprehensive product suite catering to all customer segments. This includes offerings ranging from small ticket byte-sized products to global health coverage products, enabling market expansion and targeting newer customer segments to include younger customers and those with lifestyle-related conditions. ABHI is constantly working towards customer segmentation and mapping of customers and distributors by leveraging data enrichment and analytics across the Customer Life-Time Value (CLTV) to identify the right product offerings.

Health data-based risk interventions and hyper-personalisation: ABHIs health and wellness framework emphasises a holistic approach to ‘health management, disease prevention and wellness management. In FY23, the Company scaled up the health proposition by in-housing the health score stratification. This significantly increased analytical capabilities and further enabled the multifold scale up of our ‘Health First proposition. The total number of customers with a Well-being Score has increased to more than 12.8 Lakh as of March 31, 2023.

PERFORMANCE REVIEW

ABHI continues to be the fastest-growing SAHI player. The gross written premium (GWP) of ABHI increased by 57% y-o-y to _2,717 Crore in FY23. The market share among SAHI players was up by 208 basis points to 10.4% in FY23. The retail business (incl. rural) contributed to 59% of GWP in FY23, of which 87% was issued through auto underwriting. The net loss of ABHI decreased to _220 Crore in FY23 from _311 Crore in FY22. ABHI continues to make investments towards funding new business growth, creation of new distribution networks and increasing product offerings.

The distribution channel is the backbone for the Company to reach the customers. The Company has the most diverse distribution mix among our peers, with the Proprietary channel distribution mix being the largest one at 27%. Agency growth agenda is imperative for us. The Companys agent network has grown significantly, with 85,000 agents–an increase of 35% from FY22. The entire agency expansion has been facilitated through the One ABC branch expansion programme, leading to cost efficiency and access to the agents of One ABC. Additionally, we are investing in the One ABC Select Agents programme to enhance agent vintage and productivity. During the year, the Company increased the strength of its sales force from 3,000+ to 4,000+ people. The increase will help it to grow multifold during FY23.

The Company has distribution tie-ups with 15 private banks and two PSU banks. During FY23, the Company entered into partnerships with three private banks and two PSU banks. The Company continues to focus on gaining access to higher number of private bancassurance partnerships to further increase our distribution reach in the bancaassurance channel.

The Company is a pioneer in the byte and contextual space with tie-ups across unique distribution platforms. The proposed EOM guidelines/Commission guidelines have created short term disruptions. ABHI believes in the potential of its differenciated health insurace model and the growth prospects of the industry in the medium to long term.

In the Group segment, the focus of the Company is to write value-accretive Group business. The focus is to write medium-size business bundled with Cross Sell and Upsell opportunities. The Company has diversified its Group portfolio through the SME and Creditor business. It is also leveraging new client segments, including large corporates and SMEs, for business.

Digital channel for acquisition

ABHI continues to invest in customer and distribution digital assets, which are core to its operations. Further, the basic premise of ABHIs differentiated operating model continues to be its focus on hyper- personalised customer engagement by leveraging digital capabilities. This requires the Company to further invest in the digital health ecosystem on which we continue to remain focused. The Company has launched a freemium version of its digital Activ Health App in FY23 which will enable customers to experience ABHIs wellness offerings including the "Well-being Score" at scale. This freemium version of the app provides wellness benefits through a combination of free and discounted offerings. It is expected to increase customer engagement and enable the Company to expand its wellness offerings and broaden the health ecosystem.

The Company continues to focus on key health segments for our differentiated ‘Health First model. The key customer segments identified by the Company are:

(1) The relatively health conscious: During the year, the Company launched an industry-first millennial product called Activ Health targeting the millennial segment. It provides industry-first features of face-scan-based discounts and early-age discounts for the customers. The product has been well received by customers since its launch across all major distribution channels.

(2) People with lifestyle diseases: This focuses on those who are typically denied insurance benefits. Through the Chronic Management Plan, the Company has made a successful foray into this segment.

(3) Products for the salaried segment: The bancassurance channel provides ready access to a large pool of salaried class customers. Simplified customer journeys along with product proposition have been designed to cater to the specific needs of customer of this target segment.

OUTLOOK

Healthcare today is one of Indias largest sectors, both in terms of revenue and employment. It is growing at a remarkable pace due to increased digital adoption, wide coverage, increasing variety of services, and rising expenditure by public as well as private players. With challenges in other retail lines of business, general insurers have aggressively started pursuing the health opportunity.

Sustained growth strategy

Going forward, ABHI will continue with its differentiated ‘Health First approach for better risk selection and risk pool management, leading to lower claims for engaged customers. The Company continue to expand a diversified distribution that utilises conventional and new-age digital platforms to deliver economies of scale. The Company will continue to leverage the co-located branch infrastructure, variabalised agency model and increased branch presence across bancassurance partners. In addition to physical footprint, it will leverage the internal synergies with Aditya Birla Capital Digital to increase customer base.

Combined ratio management

ABHIs combined ratio improved to 110% in FY23, from 126% in FY22. It follows a three-pronged approach to manage the combined ratio:

1. Pricing and sourcing management: The prices of products have been increased in line with market & claims experience across flagship products across all channels and partners. Underwriting guidelines have been further strengthened with telephonic and video interview (Tele/Video MER) across specific customer segments. The Fraud, Waste and Abuse (FWA) triggers have been enhanced to further identify FWA. Cashless claims now account for significant part of total claims, enabling better case management opportunities as compared to reimbursement claims. The adoption of digital platforms has further enhanced case management capabilities.

2. Robust claims and provider management: ABHI continues to focus on better Provider Network Management with consistent focus on improving network coverage, higher package rates vs open rates, continuous review of network hospitals and blacklisting hospitals with FWA tendencies.

3. Expense management: ABHI uses various initiatives such as scaling up agency network with variable pay, resource sharing based on geography, and commercial renegotiations with partners based on actual claims experience.

Key Financial
			( in Crore)
Profit & Loss Statement	FY21	FY22	FY23
Retail Premium	936	1,140	1,519
Rural Premium	126	169	86
Group Premium	239	418	1,112
Gross Written Premium	1,301	1,727	2,717
Revenue (IND AS)	1,202	1,631	2,566
Operating expenses (including claims) (INDAS)	1,401	1,942	2,786
Profit before tax (IND AS)	(199)	(311)	(220)

ADITYA BIRLA MONEY LIMITED _STOCKS & SECURITIES_

Aditya Birla Money Limited (ABML) is a one-stop shop for customers for their entire investment and trading needs. ABML offer a full range of services relating to investment in stocks, mutual funds, IPOs, SGBs, PMS, among others and trading in equity, commodity and currency derivatives. The product and service innovations enable differentiated experiences for customers.

INDUSTRY OVERVIEW

Indian stock market has seen volatile in FY23 amid aggressive monetary policy stance by global central banks, the Russia-Ukraine war, high inflation, and outflows from overseas funds. Niƒy and Niƒy Midcap 100 were flat in FY23 while the small-cap was down by 4%. Despite all these challenges, India was still the second-best performer among the emerging markets in FY23 aƒer South Africa. The outperformance was mainly because of _2.6 trillion net inflows from domestic institutional investors compared to around _2 trillion outflows by Foreign institutional investors. Retail broking businesses continue to improve their market share through digital initiatives. The rise of discount brokers has made it easy to invest in financial markets via zero brokerage, e-KYC and user-friendly mobile-based platforms which has made stock buying as seamless and intuitive as shopping online. Quick and paperless onboarding, UPI-based fund transfers, and a stable and scalable product have enabled equity participation for every Indian. The number of demat accounts in India rose to _11.4 Crore in March 2023 from _9 Crore in March 2022, registering a growth of 27%. Penetration of demat accounts in India increased from 6.4% to 8.1% on a YoY basis. During FY23, the flat to lower market has caused cash volume to correct by almost 20% YoY to _53,564 Crore ADTO, while derivative ADTO more than doubled to _152 trillion.

PERFORMANCE REVIEW

The Company recorded Revenue from Operations of _267 Crore for the year ended 31^st March 2023 as compared to _233 Crore during the previous year, an increase of 14% led by higher broking and interest income. The Profit aƒer Tax stood at _47 Crore for the year ended 31^st March 2023 as compared to _36 Crore in previous financial year, an increase of 31%.

OUTLOOK

With the on-going global macro challenges and a reasonable base of FY23, Indias GDP growth is likely to slow its pace next year. RBI expects Indias GDP to grow by 6.5% for FY24, with growth expected to be strong in Q1 and then gradually taper for the balance of quarters. On the Inflation front, though crude oil and commodity prices have corrected, their future trajectories remain uncertain, as revival in demand from countries recovering from pandemic could result into upswing. The broking industry has gone through a significant transformation over the years. Amongst the key changes are massive digitisation, focus on value-added services and a move from transactional to fee-based revenue models. The industry has seen higher volumes from retail investors post the pandemic when the market was in a bull run, but whether the pace will continue in a sideways or a bear market will be key to watch. However, the financialisation of savings and equitisation of financial savings is still at a very nascent stage with a demat account penetration of just about 8.1%. The Company will continue to focus on technology, drive client acquisition, increase its business partner network, rationalise cost and provide efficient trading tools and value-added research recommendations to its clients. The overall strategic focus is to create product and service differentiators across all segments. However, any stringent regulations from SEBI regarding such as client float, options trading, etc. shall have a bearing on the retail broking industry.

Key Financial
			( in Crore)
Profit & Loss Statement	FY21	FY22	FY23
Customers (Active)	1.2 Lakh	1.3 Lakh	2.0 Lakh
Revenue	192	233	267
PBT	22	36	47

ADITYA BIRLA INSURANCE BROKERS LIMITED _GENERAL INSURANCE BROKING_

Aditya Birla Insurance Brokers Limited (ABIBL) is a leading composite general insurance intermediary, licenced by the Insurance Regulatory and Development Authority of India (IRDA). The Company specialises in providing general insurance broking and risk-management solutions for corporate and individuals alike. The Company also offer reinsurance solutions to insurance companies and have developed enduring relationships with Indian and global insurers operating in India, South Asia, the Middle East and Southeast Asia.

INDUSTRY OVERVIEW

The Indian insurance industry earned a total premium of _ 6.3 lakh Crore for FY23 of which Rs. _3.7 lakh Crore were from Life Insurance segment (First year premium) and _2.6 lakh Crore were from the General Insurance segment. The sheer size and growth potential due to low penetration and growing economy makes it one of the most attractive investment opportunities. However, penetration and density have remained low, indicating the need to address challenges, which impede growth. Gross Premium underwritten by the Non-Life Insurers in India has grown by 16% from _2,20,700 Crore in FY22 to _2,56,912 Crore in FY23 (Source: GIC Council). Health insurance continues to be the largest insurance segment buoyed by a growth in Group Health Premiums (26% YoY), Govt. Health schemes (41% YoY) and Retail Health (15% YoY). Hence the top 4 contributors in Non-Life Industry Premium were Health Insurance, Motor Insurance (OD & TP), Crop Insurance and Fire Insurance segments respectively with about 35%, 32%, 12% and 9% share respectively. While Property segment showed a YoY growth of 11%, Health segment showed a robust YoY growth of 23% mainly on account of hardened premiums due to high claims made on the Group Insurance front coupled with sustained demand for retail Health Insurance Policies and increased government spending on Health Insurance. Motor Insurance bounced back with 15% growth with rebound in automotive sales post resolution of the industry wide semi- conductor shortage challenge. (Source: GI Council).

PERFORMANCE REVIEW

ABIBLs overall premium shrank by 2% from _5,687 Crore to _5,598 Crore and revenue shrank by 11% from _691 Crore to _618 Crore; however profitability (PBT) increased by 13% from _86 Crore to _97 Crore, another record high on account of improved margins in the Retail & Reinsurance segment due to cost efficiencies and higher productivity.

OUTLOOK

Insurance broking is the only channel, which represents customers and not insurers. The unique role of the broking channel is recognised by the regulator, insurers and customers. Despite the robust growth over the years, penetration and density have continued to remain low and impede higher growth, indicating the need to address challenges. Although the broking channel is still evolving it is currently the only channel that continues to meet risk management requirements of customers comprehensively.

ABIBL places strong emphasis on retention of its clients across the Corporate, Retail & Reinsurance lines of business. Various initiatives have been implemented for enhancing corporate business by targeting large corporate clients through its sector specific approach. Further ABIBL has been utilising the post- covid scenario to capitalise and build on its digital assets which are used across all the lines of business by several stakeholders.

Key Financial
			( in Crore)
Profit & Loss Statement	FY21	FY22	FY23
Premium Placement	4,852	5,687	5,598
Revenue	591	691	618
PBT	71	86	97

RISK MANAGEMENT

At ABCL and its subsidiaries, we attach great importance to the identification, measurement, and control of risks. All the functions are responsible for the management of risks. The Board of Directors and our Risk Management Committee monitor the process of Risk Management and give suitable directions to the management to adopt appropriate Risk Control measures.

Traditional risk and control indicators serve an important purpose for financial institutions to determine their risk appetite. Technology has made it possible to use an increasing amount of data in analysing risk scenarios and identifying their possible impact on business strategies. At Aditya Birla Capital, we have created a framework that combines the traditional approach and modern data-driven approach to facilitate risk management. Against the backdrop of this credit environment and general macro factors playing out across sectors, we remain confident of our integrated risk and governance approach, which has demonstrated the capability to withstand economic and credit cycles, as well as dynamically adopt new scenarios and learnings into the risk and governance framework. We are well positioned to accelerate our growth across all lines of business, given our strong risk architecture, coupled with our strong management capability, robust capital, liquidity management and high governance standards.

INTERNAL CONTROL SYSTEMS

Our Company has in place an adequate internal audit framework to monitor the efficacy of internal controls with the objective of providing the Audit Committee and the Board of Directors an independent and reasonable assurance on the adequacy and effectiveness of the organisations risk management, internal controls and governance processes. The framework is commensurate with the nature of the business and the size, scale, and complexity of its operations.

The internal audit plan is developed based on the risk profile of business activities of the organisation. The audit plan covers process audits of different functions and is approved by the Audit Committee, which regularly reviews compliance.

CAUTIONARY STATEMENT

Certain statements made in this Management Discussion and Analysis may not be based on historical information or facts and may be ‘forward-looking statements within the meaning of applicable securities laws and regulations, including, but not limited to, those relating to general business plans and strategy of Aditya Birla Capital Limited (‘ABCL, ‘The Company or ‘Your Company), future outlook and growth prospects, competition and regulatory environment, and the managements current views and assumptions which may not remain constant due to risks and uncertainties and hence, actual results may differ materially from these forward-looking statements. This Management Discussion and Analysis does not constitute a prospectus, offering circular or offering memorandum, or an offer to acquire any of the Companys equity shares or any other security, and should not be considered as a recommendation that any investor should subscribe for or purchase any of our Companys shares. our Company, as such, makes no representation or warranty, express or implied, as to, and does not accept any responsibility or liability with respect to the fairness, accuracy, completeness or correctness of any information or opinions contained herein. Our Company assumes no responsibility to publicly amend, modify or revise any forward-looking statements on the basis of any subsequent developments, information or events or otherwise. Unless otherwise stated in this Management Discussion and Analysis, the information contained herein is based on the management information and estimates. The financial figures have been rounded off to the nearest Rupee One Crore. The events and developments upto 31^st March, 2023 have been covered in the Management Discussion and Analysis.