Birla Sun Life aims to double revenue in two years

Aditya Birla Nuvo, the fertilizer-to-telecom conglomerate, expects over half its revenues to come from the life insurance business by the end of 2010-11.

At the end of March 2008, Birla Sun Life Insurance, with total revenues of Rs 4,012 crore, accounted for a third of the company’s total revenues of Rs 12,134 crore.

“We expect about 50-60 per cent of the parent company’s revenue to come from life insurance by 2010-11,” said Aditya Birla Nuvo Managing Director Bharat K Singh. While he did not disclose how much revenue the company is expecting in 2010-11, Aditya Birla Nuvo reported around 45 per cent topline growth in 2007-08.

The insurance business grew 94 per cent though high operating costs and initial expansion eroded its profit.

Over the next 17 months, Birla Sun Life Insurance Company is expected to double its revenue and break even by 2010-11. The company will see a capital infusion of Rs 1,000 crore from the parent during the current financial.

Insurance and business process outsourcing are the two key businesses for Aditya Birla Nuvo which the company wants to build on the earnings from its more mature business such as textile, fertilisers, rayon, carbon block and insulators.

Birla Sun Life plans to add 400 new branches by March 2009 for which it will invest around Rs 350 crore. The insurance company is aiming to be among the top three players in the segment by taking it branch reach to 1,000 and adding 100,000 agents. Birla Sun Life is now ranked sixth in the life insurance sweepstakes.

Birla Sun is a joint venture between Aditya Birla Group and Sun Life Financial Inc of Canada for life insurance, asset management and wealth management businesses. The Aditya Birla Group holds a 74 per cent in the company.

Business analysts say that a life insurance firms takes seven to nine years to reach the break-even point. And if Birla Sun Life achieves it break even in 2010-11, then it would be in its ninth year.