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Jan 25, 2013, 02.41 PM IST
Battery supplier Exide Industries has agreed to increase its stake in the insurance joint venture, ING Vysya to 100 percent.
We at Exide feel that life insurance business is still evolving and we recognize the considerable scope of growth of life insurance business in the country.
Battery supplier Exide Industries has agreed to increase its stake in the insurance joint venture, ING Vysya to 100 percent. The company has decided to acquire the remaining 50 percent stake in ING Vysya Life Insurance for Rs 550 crore from its three partners, including ING. Currently, the company holds 50 percent in its insurance subsidiary.
AK Mukherjee, Director of Finance and CFO, Exide Industries told CNBC-TV18, he believes the life insurance business is still evolving and therefore, they recognise the potential to grow in this field. According to him, their involvement with the life insurance business will add value to stakeholders. He also expects the business to breakeven in FY13.
Mukherjee further added that the insurance business does not need any fund infusion in the near term. At the moment, Exide is looking for a partner in the business, he informed. However, there is no clarity about the time when a strategic investor will be roped in, he added. He is also hopeful of improving the financials of ING, but at a slow pace.
Here is the edited transcript of the interview on CNBC-TV18.
Q: Why are you spending so much of the cash on your balance sheet in this insurance buy at a time when core business is under a bit of threat?
A: We at Exide feel that life insurance business is still evolving and we recognize the considerable scope of growth of life insurance business in the country when the large population is still either under-insured or not insured at all. The recent hike in the income level, particularly in the lower level of the pyramid and the recent focus of the central government in this sector gives a considerable growth opportunity for life insurance business.
So taking all this into account, we feel that our continued involvement in the life insurance business will certainly add value to the stakeholders, both in the medium as well as in the long-term. The internal fund generation is quite sufficient to take care of any investment requirement for capacity enhancement in the core business as well as any investment in the life insurance business.
Q: This one-time cost aside, would you need to spend more money from your balance sheet to fund the insurance venture which is still not making money?
A: ING Vysya Life’s performance has improved over a period of time and we expect them to breakeven during this current financial year ending March 2013. There is no fund requirement in the last financial year. Even in the current financial year, there is no further fund requirement. We do not expect any further fund requirement in the immediate future.
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