Jio Financial Services Limited (JIOFIN) Earnings Call Transcript & Summary

Ladies and gentlemen, good afternoon. It's 2:00 p.m. and time to start the meeting. I welcome all of you to the First Annual General Meeting post our listing of Jio Financial Services Limited. A requisite quorum is present, and therefore, I call the meeting to order. I wish to introduce, for the benefit of members, my colleagues in the Board of our company: Mrs. Isha Ambani Piramal; Shri Rajiv Mehrishi; Shri Sunil Mehta; Shri Bimal Manu Tanna; Mrs. Rama Vedashree; Shri Anshuman Thakur, Shri Hitesh Kumar Sethia. All the Directors of the company are present at this meeting. Shri Abhishek Pathak, Group Chief Financial Officer; Mrs. Mohana V., Group Company Secretary and Compliance Officer; and the representatives of our statutory auditors and secretarial auditor of the company are also present at the meeting. I request Ms. Mohana, Company Secretary, take us through the regulatory matters and general instructions pertaining to the Annual General Meeting.

Thank you, Chairman. I welcome all of you to the First Annual General Meeting of the company post listing. This meeting is held through video conferencing. This is in compliance with the circulars issued by Ministry of Corporate Affairs and SEBI. The company has taken all feasible steps to ensure that the members are provided an opportunity to participate in the Annual General Meeting and vote. Adequate videoconferencing facility and live webcast of the proceedings of this meeting have also been provided. Register of Directors and Key Managerial Personnel and their shareholding and Register of Contracts or Arrangements, in which Directors are interested, are available and will remain accessible to the members for inspection electronically if they so desire. The notice dated 5th August 2024 convening this Annual General Meeting and a copy of the annual report for the financial year ended March 31, 2024, have already been circulated electronically to the members of the company. With the permission of the members, I shall take the notice as read. The auditor's report on the stand-alone and consolidated financial statements and the secretarial audit report of the company for the financial year ended 31st March 2024, do not contain any qualification, reservation, adverse remark or disclaimer. Accordingly, these reports are not required to be read out as provided in the Company's Act 2013. In accordance with the SEBI listing regulations and Company's Act 2013, the remote e-voting facility was provided to the members to cast their votes from 25th August 2024 till 29th August 2024. In case you have not yet cast your vote, please vote through InstaPoll after it is announced at this meeting. The icon for e-voting appears on the left bottom side of the meeting page, which will be enabled after voting is announced. Members attending this meeting can also post their comments or queries in the chatbox during the question-and-answer session. The scrutinizer -- Shri Chandrahas Dayal has been appointed as a scrutinizer, and he is present at the meeting. The e-voting results, along with the consolidated scrutinizer's report will be placed on the website of the company and on the website of KFinTech, company's registrar and transfer agent, and the stock exchanges. I now hand over the proceedings of the meeting to our Chairman. Thank you.

Thank you, Mohana. I will now begin my formal address to the members. Dear members, it's my privilege to preside over your company's first Annual General Meeting post its listing. The world is experiencing a period of moderate economic growth with inflationary pressures persisting and interest rates remaining elevated. The IMF's baseline forecast for the world economy is to grow at 3.2% in 2024 and 2025, even as the road to recovery has been uneven. Amidst global uncertainties, India continues to be a bright spot in the world economy and a major engine of global growth. At an estimated growth rate of around 7% to 7.2% in FY '25, India is expected to remain the fastest-growing major economy in the world. If India can sustain this rate of growth, then doubling our country's GDP every 6 years-or-so, isn't unimaginable. On the foundation of policy reforms, strong domestic consumption, a rich demographic dividend and investments in both physical and digital infrastructure, India is well on its way to becoming a $12 trillion economy within the next decade. New-age financial services that cater to the aspirations of a new India will be crucial in growing this ambition by helping the country's youth achieve its full potential. While the size of our economy is around $4 trillion today, at present, India remains an unserved financial services market. The credit-to-GDP ratio in India is significantly lower than the world average and lowest among Asian peers such as China, South Korea and Vietnam. Thus, the opportunity before us is immense, and technology will provide to be -- will prove to be a great enabler of this revolution in financial services. Affordable data and devices, advanced analytics and technology, including AI and cloud computing are redefining the future of finance. The revolution that has happened in digital payments now needs to extend to other forms of financial services such as digital bank accounts, digital credit, digital insurance, digital investments and wealth management services, amongst others. I would like to thank our customers, partners and shareholders for your trust and commitment to our mission. Our journey has just begun, but we are well on our way towards creating an institution that plays a pivotal role in shaping the future of finance while ensuring growth and well-being of the people of India. Thank you. I now invite Hitesh Sethia, MD and CEO, to report on the progress of the company.

Thank you, Mr. Chairman. Respected Chairman, Shri K. V. Kamath, Directors on the Board and dear shareholders, good afternoon. It is my privilege to welcome you all to Jio Financial Services Limited's first AGM post its demerger and listing. With India having firmly entered Amrit Kaal, India is poised for exponential growth over the decades to come at an estimated 7% GDP growth rate, in FY 2025, India is expected to remain the fastest-growing major economy, well on its way to realizing the vision of Viksit Bharat by 2047. Financial services is a key catalyst, which has a significant multiplier effect on the economic growth of a country. Our demographic dividend, rising affluence, proliferation of data and devices and financialization of household savings will provide significant tailwinds to the growth of financial services in India. As such, JFSL is entering the market at a very opportune time. As you are aware, the Board of Reliance Industries Limited announced in November 2022, that it would be demerging the financial service businesses into your company. Post NCLT approval, JFSL was listed on the stock exchange in August 2023. Our ability to leverage the Jio brand, a household name, and a well-capitalized balance sheet, are strengths that give your company a solid bedrock for growth. Our strong brand, a bespoke technology stack, characterized by modern cloud-based solutions, a committed team of seasoned professionals, a robust liquidity profile and a well-capitalized balance sheet gives us the right to play and the right to win. Even as we pursue growth, we are committed to maintaining unequivocal focus on the highest standards of governance and ensuring prudent capital deployment in businesses within risk guardrails. Our principles, encapsulated by the 4 Rs, which is reputation above all, regulatory adherence in letter and spirit, return of capital and return on capital, provide us a very strong foundation to build on. Over the last financial year, we have put in place the building blocks of a formidable financial services group, which will help create long-term sustainable value for our customers, investors, employees and all our partners. As mentioned earlier, we believe our foundational philosophy of the 4 Rs positions us well for long-term success. We are committed to always doing what is right by our shareholders, and these guiding principles will ensure that we remain risk-calibrated even as we pursue growth. When we speak about governance, one of the highest elements -- biggest elements, rather, is to have a strong and independent Board. We have a very diverse Board with our Directors bringing in strong and multifaceted domain experience, helmed by Shri K. V. Kamath, our respected Chairman. A majority of our Board comprises Independent Directors. I would like to take this opportunity to thank all of them for their continued guidance and direction. As a new age digital-first financial services institution, our technology stack will be our key differentiator, which will allow us cost advantages on cost of service and help us deliver a bespoke customer experience. The key advantage we have is that we are not weighed down by any legacy technology, and we have been able to successfully implement a modular and a scalable tech stack that is cloud-first. Our technology backbone will support our distribution approach, which will be direct to customer, digital or at the point of sale embedded in the customer's journey. In addition to a strong technology architecture, data analytics will also play a central role. The 3 sets of data we will leverage here are: credit bureau data, data from account aggregator and alternate data. Here are some of the important milestones that have been achieved in little over a year. I would like to specifically call out our joint venture with BlackRock, the world's largest asset manager, which will allow us to bring world-class investment products to the people of India. While the initial JV was announced for an asset management company in July 2023, it was extended to wealth management and broking services in April 2024. This is indeed a demonstration of the faith that both JV partners have in the prospects of the Indian market at a time when the financialization of household savings in India is growing at a very rapid clip. Our NBFC, Jio Finance Limited, receiving a AAA rating by CRISIL was also another feather in our cap. This indeed demonstrates the inherent strength of our business stemming from robust liquidity and capitalization. In July of 2024, we also received the approval from Reserve Bank of India to convert into a core investment company, which marks an important step in the evolution of our businesses. Another very big step for us was the launch of Jio Finance app. We have always maintained that we will be a digital-first platform that will cater to the aspirations of new India by offering timely and cost-effective financial solutions. The initial feedback to the app from our customers has been extremely positive. We have also gone live with quite a few products in FY 2024, and you will hear of many more launches in FY 2025. Now let's take a look at some updates pertaining to our businesses. JFSL's mission is to democratize access to financial services for the people of India and cater to their diverse and evolving financial needs across the 4 pillars, which is borrow, transact, invest and protect. This translates into service lines, including lending and leasing, payment solutions and the payment bank, insurance broking and lastly, mutual funds, wealth management and broking services. A significant milestone for your company was to go live with the Jio Finance app in May 2024. I'm very happy to report that as we speak, the Jio Finance app has crossed over 1 million downloads, and the numbers are only growing each and every day. The initial feedback to our intuitive digital platform, which aims to enhance customer experience for financial services, has been very encouraging. In line with our philosophy of being customer first, we would like to evolve the app into a world-class offering with active participation and support of our customers. Some of the services, which are already live on the Jio Finance app today include loan on mutual fund, savings account, UPI, bill payment, digital insurance product, recharges and more products will be going live soon. With the foundational work done over the last financial year, Jio Finance Limited, our NBFC, is well positioned to capture the lending market opportunity by adopting a digital-first business market to cater to consumers and businesses. The portfolio is being built out with due consideration to customer risk profile and evolving business and regulatory dynamics. In this business, we have indeed accelerated our journey towards launching secured products in the market and businesses such as supply chain finance, loan on mutual funds and enterprise solution for device financing have already been launched and are in the process of being scaled up. We are also in advanced stages of launching home loans, which have been rolled out in a beta mode, and other products such as loan against property and loan on securities are in the pipeline as well. In December of 2023, we had announced our entry into leasing service business through an operating lease model, which we called Device-as-a-Service. We expect the scale-up of this business in the coming quarters. Moving forward to Jio Payment Bank Limited. Jio Payment Bank Limited provides digital banking solutions to consumers and small businesses. The services offered include savings account with debit cards and a host of consumer payment solutions such as UPI, Aadhar-enabled payment services and domestic money remittances. The business is being driven by garnering customer deposits and facilitating daily banking needs at a low cost with a digital-native approach. For this, we have completely reimagined the technology stack for the business, and I'm very happy to state that now a customer can open a digital savings bank account with Jio Payment Bank in under 5 minutes, completely online. The proliferation of digital payments in India through UPI has been nothing short of phenomenal, and Jio Payment Solutions is well positioned to leverage the potential of our growing digital economy by offering convenient payment solutions to both online and offline merchants. We have revamped the entire tech stack for the merchant integration and service delivery for this business, which has an in-principle approval from the Reserve Bank of India to operate as a payment aggregator. We are actively pursuing merchant tie-ups and partnerships with multiple banks and financial institutions to scale this business with a focus on online merchants and specific cohorts in offline merchant segments. Moving forward, with income and education levels increasing, the awareness regarding the importance and benefit of insurance is also rising in the country. However, India still remains an under-penetrated insurance market, and the opportunity for growth here is immense. Jio Insurance Broking distributes products of multiple insurance companies digitally. The portfolio is comprehensive and includes fire and property insurance for businesses and extended warranty, life, health and motor insurance for our consumers. We have already tied up with over 31 leading insurers in the country and are offering simple and affordable products for the consumer, including embedded insurance for white goods at point of sale, extended warranty for consumer durables and mobiles and digital auto and 2-wheeler insurance through the Jio Finance app. We are also very excited about the potential of our JV with BlackRock, which is the world's largest asset manager with over $10 trillion of assets under management. Our understanding of the Indian market and consumer and the distribution reach, coupled with BlackRock's renowned expertise in asset management, will help us bring world-class investment product to Indians, spanning across mutual funds, wealth management services and broking. We have already identified the key leadership for our AMC JV with BlackRock and are in advanced stages of developing our technology infrastructure and go-to-market strategy. We are hopeful of receiving the necessary approvals for this business from the regulator at the appropriate time and commencing operations thereafter. Now let's take a brief look at our financials for FY 2024. As this slide shows, we are profitable and we have a very well-capitalized balance sheet, which will help us scale up significantly. In summary, I would like to say that the advantages of brand, capital, lack of any legacy technology, an amazing team of professionals give us the confidence and excitement as we build JFSL to be the best and most trusted financial service provider in the country catering to the aspirations of new emerging India. Thank you.