Financial Daily from THE HINDU group of publications
Tuesday, Apr 15, 2003
Financial Daily from THE HINDU group of publications Tuesday, Apr 15, 2003 |
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Money & Banking
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General Insurance Murugappa group to get Rs 33 cr from Mitsui Our Bureau
Mr. M.A. Alagappan, Chairman, Cholamandalam MS General Insurance Co Ltd, and Vice-Chairman and Director (Business Strategy) Murugappa Group and Mr Tadao Iso, Managing Director, Mitsui Sumitomo Insurance Co Ltd, Japan at a press conference in Chennai on Monday.
CHENNAI, April 14 THE Murugappa group will get $7 million (about Rs 33 crore) from Mitsui Sumitomo Insurance Company of Japan, for stake in the insurance joint venture, Cholamandalam MS General Insurance Company Ltd. The Murugappa group first started its insurance company as a fully-owned venture, under the name Cholamandalam General Insurance Company. Later, Mitsui joined the company, with a 26-per cent stake. However, IRDA's regulations prohibit the promoters of an insurance company selling down their stake. Therefore, the company came out with a rights issue and the Murugappa group renounced the rights in favour of Mitsui, at a premium of $7 million. The premium will be shared by the three companies of the Murugappa group which have stakes in the insurance venture, viz., Tube Investments of India (75 per cent), Cholamandalam Investments and Finance Ltd (15 per cent) and an investment company. The cash inflow into the companies' coffers will happen in the current year. Mr M. Anandan, Managing Director, Cholamandalam Investments, said that the premium represented the value of the `Chola' brand that the group had built over more than a decade. The joint venture was formally announced at the press conference on Monday. Mr Alagappan said that the insurance venture expected to earn a premium income of Rs 120 crore in 2003. The venture began operations in October 2002, and has so far sold about 25,000 policies and earned a premium income of Rs 15 crore, company officials said. Now, the company will also focus on "Japanese and Korean business" — for which a separate division has been set up — and expects to earn about Rs 15 crore from this segment. The Murugappa group has another insurance arm — Chola AXA Risk Services Ltd. Mr Alagappan said that the collaborator, AXA of France, has the option of either continuing with the joint company or sell its stake to Mitsui. Discussions were on.
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