Bajaj Finserv Q4 consolidated net flat at Rs 707 cr

Plans to raise Rs 1,800 cr via QIP, preferential issue

Bajaj Finserv on Wednesday posted a flat consolidated profit after tax at Rs 707.12 crore for the March quarter, due to a fall in the life insurance unit’s profits. It had posted a profit of Rs 707.63 crore in the year-ago period.

Bajaj Finserv is the holding company representing Bajaj Group's interests in the financial services space.

The profit before tax and finance cost for the life insurance business in the fourth quarter recorded a fall of 23.05 per cent at Rs 592.61 crore.

"Profit was flat mainly because of fall in profit in the fourth quarter for the life insurance business, which is a reflection of poor growth in the previous year, whereas that was more than made up by growth in the non-life insurance business and Bajaj Finance, which kept flat profit for the year," said Sanjiv Bajaj, managing director of Bajaj Finserv.

The general insurance business recorded growth of 37.39 per cent in profit before tax and finance costs at Rs 197.46. The fourth quarter profit after tax for Bajaj Finance recorded a growth of 27 per cent at Rs 231 crore.

In Bajaj Finance, the growth was largely fuelled by a boost in consumer and SME financing.

Shareholders of Bajaj Finance approved a plan to raise funds through issue of securities up to Rs 1,400 crore through qualified institutions placement, and preferential issue amounting to Rs 400 crore to Bajaj Finserv, the holding company of Bajaj Finance.

"We are hopeful that in the new year there will be good growth in life insurance. We have a full bouquet of products now. That was not the case last year after the new product guidelines. We have done a transformation of our agency business model. So combination of these factors will help us to achieve good growth," said Bajaj.

New product guidelines that had come in January 2014 for traditional products made changes in the product structures and surrender value. Due to this, life insurers were required to refile all their products with the regulator.

Anuj Agarwal, managing director and CEO, Bajaj Allianz Life Insurance said that profits in life insurance always trail the business by 3-4 years. "We had a massive Ulip portfolio from 2009-2011 and after the three year lock-in period, due to redemptions, the expected charges came down and hence profits were down." At present, Ulips form 60-65 per cent of their portfolio and 30-35 per cent is traditional products.

The consolidate net profit of Bajaj Finserv for the financial year ending March 31, 2015 recorded a 9.44 per cent year-on-year growth in  net profit after taxes, minority interest and share of profit of associates at Rs 1,689.79 crore.