The Rs 3,900 crore Chennai-based Murugappa group has decided to enter the insurance business by promoting a general insurance company through one of its group companies- Tube Investments of India (TII). The decision was taken today at TII's board meeting in Chennai.
M V Subbiah, chairman of TII, said, "TII sees an opportunity for the company to benefit from the expected to growth of this sector. General insurance, in particular, has been identified as a high growth area.
TII's participation in that business, by promoting a general insurance company along with Cholomandalam Investment and Finance Co. Ltd. (CIFCL), would supplement and improve TII's profit in the long run."
According to a company official, the entire process of changing the Memorandum of Understanding of the company and seeking shareholders' approval would be completed in the next two months. He refused to comment on the shareholding pattern of the proposed company, saying that it is pre-mature to comment on that aspect.
Only on Tuesday, TII, as part of its strategy to diversify its business portfolio and enter high growth areas, announced its decision to acquire 41.08 per cent stake in CIFCL at a maximum of Rs 47 per share.
TII had already acquired 8.9 lakh shares of Cifco from Parry Agro Industries Ltd and Ambadi Investments Private Ltd- both part of the Murugappa group. Of late, the company is facing difficulty in its traditional business.
TII has posted a net profit of Rs 6.53 crore on a turnover of Rs 241.08 crore for the three months ended June 30, 2001 against a net profit of Rs 8.1 crore on a turnover of Rs 278.44 crore during the corresponding period of previous fiscal. Both, turnover and net profit have declined by 13 per cent and 19 per cent respectively.
