The Chennai-based Murugappa group has renounced 26 per cent stake in Cholamandalam General Insurance Company Ltd in favour of Mitsui Sumitomo Insurance Company Ltd of Japan.
The Murugappa group will receive a premium of $7 million in this fiscal for renouncing its rights issue claim in favour of Mitsui Sumitomo.
Under Insurance Regulatory Development Authority rules, the promoters of an insurance company cannot sell their stake to other companies.
Therefore, the Murugappa group, which owned 100 per cent stake in Cholamandalam General, came out with a rights issue.
On Monday, Cholamandalam General formally announced its joint venture with Mitsui Sumitomo. The company has also been renamed as Cholamandalam MS General Insurance Company Ltd.
The new company will have a capital base of Rs 142 crore against Rs 105 crore when it started its operations in October 2002.
M A Alagappan, vice chairman and director (business strategy), Murugappa Group, said,
