The numbers have come in slightly better than what the Street is estimating but two areas I would like to start the discussion with is where the market is looking for some clarity from the management side. One is on VNB (value of new business) margins. They came in 100 bps lower than what the Street was estimating. Do you see scope of improvement in margins in the next coming quarters?
Siddhartha Mohanty: We have shown 60 bps growth over last year. Last year it was 16.2% in VNB margin, this time it is 16.8%,. So from now onwards, there will definitely be growth. Our expectation will be at least 2-3% more in margin that is our target for the current year.
We are always talking to top institutional investors which are the biggest shareholders. One clarity which a lot of people are expecting is that the divergence in face value changes in balance sheet and overall a movement in embedded value. What would be your clarification for the market on that in this quarter?
Siddhartha Mohanty: We have moved from Rs 5,82,000 crore to Rs 7,27,000 crore and there’s a very huge growth in our India embedded value and that comprises all our business as well as other factors which contribute to growth so that growth rate will continue and the market should trust us. I expect at least a 10% further growth in IEV in the current year.
The other thing is that with new product launches, you are planning a slew of new products and wanting to gain market share further because there is a lot of competition on the ground. In which area would the new product launches be in? We understand you also are looking at health insurance as well and can you share some more data on that?
Siddhartha Mohanty: Last year we introduced seven new products and mostly in non-par segment for which we could get some good contribution from this, this segment in non-par and non-par share to AP grew to 18.32%, from 8.89 it grew to 18.32% because we launched a new product. There was a directional change in our approach to marketing and product mixing.
In the current year, focus will be on catering to certain segments and a specific product will be designed for those segments. For example, for Banca, we plan to design some bank specific products and for lower segment and rural area tier III cities, for marginal people, separate insurance products with auto cover will also be launched in the current year. In totality, some new products will contribute to achieve our strategic goal in the current year.
When we speak to the finance ministry, they sound very upbeat about LIC in particular, especially about the leaps you are taking towards technology upgradation both inside internally in your processes and also externally dealing with the client side. What direction is LIC taking? Your Super App is also due.
Siddhartha Mohanty: Last year, we have undertaken a digital transformation project which will include total digital transformation of all our operations and we have named it a project DIVE (Digital Innovation and Value Enhancement). That project is underway, it is 18 months’ project; some milestones have been identified and now time has come to achieve one milestone after another and once that project is totally completed, you will see a totally new LIC with 95% less paperwork. Today also we are able to complete policies without paper, without wait signature. Last year, we completed 11,58,000 policies through our Ananda mobile app which is available with agent, agent having one smartphone and customer at his place a smartphone both are separate in their respective places and in a matter of 10 to 12 minutes proposal starting from customer onboarding e-KYC verification RTGS, NEFT payment, underwriting, receipt issue and a policy issue everything matter to 10 to 12 minutes, last year we completed 11,58,000 policies and it is totally paperless, no wait signature also, no afterward paperwork. This year, we want to scale it up. Now, we have launched Ananda version 2, in which a policy is completed in a matter of five to six minutes. Already our agents have started more than a thousand policies in very recent times. So, the objective of the current year focus will be on total digital transformation technology but at the same time, we want to enable our agents through technology. We have taken a project agency transformation project also, digital transformation, also agency transformation.
Your Super App will be launched by September, October?
Siddhartha Mohanty: That work is going on. I am hopeful that in the current year, before December, it will be definitely launched.
What about on ground competitive intensity? How are things on the ground? What kind of growth initiatives are you taking?
Siddhartha Mohanty: As more players are there, competition will be tougher day by day, but looking at LIC’s magnitude of operation, we are there and we want to expand further. Agency is our strength. Agency channel is the dominant channel, but we want to strengthen it further without losing focus on alternate channel, banca alternate channel as well as a digital market. Those will be focus areas and will take time to grow.
You are winding up FY24 and now starting FY25. What are the parameters, what metrics, what kind of improvement have you targeted for the new year in terms of operating metrics as well as growth?
Siddhartha Mohanty: Focus will be on both areas profitability as well as top line, both so we have to focus because the last two-three years post listing we focused on profitable growth, so there has been directional change in our approach to marketing like launching new non-par products, increasing share of non-par, increasing share of non-par in AP margin – all those things but we lost some 2-3% in market share top line. So, this year the focus will be on regaining the market share without compromising on profitable growth because we have to create value for all our stakeholders. So, that will be the focus.
Because you are also the largest financial institution in the country and participate in the markets, how much participation was there in the year gone by in FY24 and how much did you invest in the markets and in FY25?
Siddhartha Mohanty: If you see the market value of our investment equity, it will be almost 4% of total market cap, nearly 3 point something and we are close to 4%. We use every year more than Rs 1 lakh crore in equity and debt also more than Rs 70,000-80,000 crore. Last year, we had good growth both in equity as well as debt – more than 40-45% growth in the debt market and in equity also, good growth rate was there.