We have enough capital for 2-3 years for life insurance business: Rashesh Shah, Edelweiss Financial

In an interview with ET Now, Rashesh Shah, Chairman & CEO, Edelweiss Financial Services Ltd, shares his views on the company’s quarterly performance. Excerpts:

ET Now: Could you walk us through the key highlights of your quarterly performance?

Rashesh Shah: For this quarter, our credit and commodities business had some uptick because the foreign investors had come in. There was a bit of uptick in the capital market businesses also. Therefore, almost all the businesses had a good quarter. The retail broking business broke-even in this quarter. The fall in interest rates and the uptick in activity for credit and capital markets have been the reason for this quarter’s increase.

ET Now: Can you give us some colour on the breakup of revenue from housing finance, commodities and treasury operations?

Rashesh Shah: Broadly, they have all grown almost equally. Our credit income has grown about 20% in the quarter. The retail finance book has grown by approximately 30% in this quarter.

ET Now: What are the capital needs for your life insurance business over the next 2 years and how do you plan to meet them?

Rashesh Shah: When we started the life insurance business, we had capitalised it with Rs 550 crore which was the starting equity capital in the business. That business still has Rs 450 crore of equity capital after all the investments that we have made in the operating cost. Therefore, we have enough capital for the next couple of years.

We have an agreement with our partner Tokio Marine that when required, we will both infuse money. We have enough capital for the next 2-3 years. We expect this business to breakeven in about 5 years and we will be in investment mode. The plan we have made has ensured that there is enough capital for getting the business to a certain size and to breakeven in 5 years.

ET Now: What has been the profit contribution from your 4 business segments - retail, finance, capital markets including asset management and commodities for the financial year?

Rashesh Shah: For insurance, the operating burn is still at an investment phase. Therefore, if we keep out insurance, we have made about Rs 240 crore of profit after tax. About half of that comes from our credit business and another 30% comes from our commodities business and the balance is from asset management and capital markets.