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Exide not to divest stake in insurance business, renames Exide Life

Tuesday, 6 May 2014 - 6:20am IST | Place: Kolkata | Agency: dna

Battery major Exide Industries has dropped its plans to bring in a strategic partner into its life insurance business and has decided to run the operations through 100% ownership instead.

"There is no such plans to take on a strategic partner nor we are going to divest any part of our stake in the life insurance business," Exide's managing director PK Kataky told dna.

The decision of the Raheja-group owned automotive battery major to continue to retain full stake in its sole diversification business coincides with the renaming of the insurance business from ING Vysya Life Insurance Co Ltd to Exide Life Insurance Co effective Monday (May 5).

Announcing the name change decision, Exide officials said a new name and a fresh brand identity will have no impact on the operations of the company. ''The members of the board of directors and senior management of the company remain unchanged.

"Changing the company's brand name to Exide Life Insurance is a reaffirmation of the long term commitment of Exide Ind to our life insurance business," A. K. Mukherjee, Chief Financial Officer of Exide said in a press release.

Rajan Raheja is the chairman of Exide Life while Mukherjee represents the battery maker in the board of the insurance venture.

Exide gained 100% ownership of the insurance venture in 2013 by acquiring additional 50% stake by buying out Dutch partner ING Insurance International, Hemendra Kothari group and Enam group.

The stake hike transaction from 50% to 100% happened at for Rs 550 crore, thus valuing ING Vysya Life at Rs 1,100 crore.

The U-turn in Exide's strategy towards its insurance business - going alone and not involving an outside financial partner - has come as a surprise for the investor and analysts' community, so far reading about news reports on impending sale of stake to some prospective high profile partners like Samsung Life or Manulife Financial Corp among others.

The burden of insurance business might remain a dampener for Exide's valuation, feels analysts.

"The uncertainty about the insurance business would definitely be a drag. Exide told us there wouldn't be any capital infusion in the current financial year FY15 but they definitely need to invest at a later stage," Yaresh Kothari, analyst with Angel Broking said.

Exide had put in close to Rs 135 crore in the insurance biz in FY14, all of it till December as no money was put in the fourth quarter.

The good news is the insurance business has doubled its profits for FY14 to Rs 53 crores after turning around in FY13 with a profit of Rs 23.07 crore, from a loss of Rs 31.15 crore loss a year back.

Asset Under Management in FY14 grew by 13% to Rs 7,491 crores, a compounded annual growth rate of 22% since 2008-09. Total premium income stands at Rs 1,831 crores, with growth of 14% in renewal.

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