RIL’s bet on ‘financial services’ — that was identified as a separate segment from the March 2020 quarter — continued to increase in the recent September quarter.

The consolidated assets of the financial services segment shot up to ₹1,07,975 crore as of September 2020 from ₹83,827 crore as of June 2020. Compared with the year-ago number of ₹23,913 crore, the segment’s assets have more than quadrupled.

Also, the segment’s consolidated liabilities as of September 2020 have shot up to ₹6,899 crore from just ₹73 crore as of June 2020 and ₹290 crore as of September 2019.

While no specific roadmap was laid out for the segment in the AGM earlier this year, or in the recent quarter results, the sharp jump in the segment’s assets and liabilities suggests that ambitious plans may be at play.

Segmental contribution

The financial services segment comprises management and deployment of identified resources of the company to various activities including non-banking financial services and insurance broking.

Interestingly, while the segment’s revenue declined to ₹612 crore in the September 2020 quarter from ₹690 crore in the June 2020 quarter, its operating profit shot up to ₹530 crore from ₹380 crore on a sequential basis, respectively. The reasons for this spike in profit are unclear.

On an overall basis, the financial services segment is still relatively quite small — accounting for just 0.4-2.5 per cent of the aggregate segmental revenue, operating profit and liabilities as of September 2020. The segment, though, accounts for a more substantial 8.8 per cent of overall segmental assets as of September 2020, up from 7 per cent as of June 2020.

The segment’s contributions could increase in the coming quarters as RIL leverages its digital and retail businesses to push growth in financial services.

The company’s annual report for FY 2019-20 had stated that based on an internal reorganisation of its business segments, RIL identified ‘financial services’ as a separate business segment.

It had added, “The anchor ecosystem of Jio and Reliance Retail provides a strong distribution channel for financial products. The strategy of the financial services business centres around creating tailor-made financial products and offering them as extensions of other products that are being offered to customers in the anchor ecosystem of Reliance’s consumer businesses. This synergistic relationship will benefit both the financial services and the anchor ecosystem businesses.”

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