 "India's gems and jewellery exports decline on a global economic slowdown")
ECGC (formerly Export Credit Guarantee Corporation of India) has settled claims of Rs 1,123 crore to exporters and financing banks during FY16 in the wake of continuing global economic recession and uncertainties. Of this, the gems and jewellery sector continues to top the list, with claims worth Rs 871 crore. In FY15, ECGC had paid claims of Rs 590 crore.
The insurer has posted a 53.3 per cent rise in net profit for FY16 at Rs 276.2 crore against Rs 180.1 crore in FY15. It has proposed a dividend of Rs 78.2 crore to its sole shareholder, the government of India.
Geetha Muralidhar, chairman and managing director of ECGC, said there has been a reduction in premium by 17 per cent for exporters from this financial year. This comes after a report by a committee headed by former ECGC CMD P M A Hakeem looked at ways to enhance the role of ECGC in the current global export climate. One of the recommendations of the report was to bring down the premium rates for exporters under its policy portfolio.
However Muralidhar said with almost 90 per cent claims coming from banks, there was no scope for reducing claims of that segment. She added that the exporter business was profitable. The insurer also gets about two-thirds of its income from banks.
In FY16, the profit before tax stood at Rs 387 crore against Rs 255 crore in FY15. The specialist insurer had also made a claim provision of Rs 1,249 crore in FY16 compared to Rs 897 crore in FY15. The insurer is looking at increase the share to 12 per cent of India's exports in three to five years; the number stands at eight per cent currently. Investment income rose to Rs 633 crore in FY16 from Rs 544 crore in the previous financial year while management expenses to gross premium came down to 14.46 per cent in FY16 against 15.32 per cent in FY15.
Other major sectors where claims arose include ready-made garments, agricultural products, synthetic yarn, engineering goods, chemicals, marine products and leather. One of the largest claims was from the gems and jewellery sector from a major jewellery exporter from Kolkata.
