Max India to demerge specialty films business

Analjit Singh-promoted Max India has decided to split the company into three verticals that would be listed to unlock the value of these businesses. As a result of this decision, the company will list its specialty films business as a separate company once the demerger process is complete in the next six to nine months.
 
After the split, Max India will be renamed Max Financial Services and will solely focus on the group's flagship life insurance activity, through 72.1 per cent stake in Max Life, making it the first Indian listed company solely focused on life insurance.
 
The second vertical would be Max India which would continue to manage investment in the high-potential health and allied business comprised of Max Healthcare, Max Bupa, Antara Senior Living and supported by a corporate management service team.
 
The third vertical will be named Max Ventures and Industries and it will house the investment in the group's manufacturing subsidiary Max Speciality Films - one of the leaders in the speciality packaging films business (it recorded revenues of Rs 746 crore with a profit of Rs 14 crore in FY14). Max Ventures would look into exploring new businesses which would primarily be focused on providing affordable solutions but Singh did not divulge further details on that. “The Prime Minister’s new initiative ‘Make in India’ is set to provide fresh impetus to this business and for this vertical, to start looking at fresh ideas in the ‘wider world of business’,” said Max India in a press release.
 
Terming the demerger as structural clarity, Analjit Singh, non-executive chairman of Max India, said the plan to split the business was undertaken about a year back but this was the right time to act on it given the pro-business sentiment created by the government.
 
Max India had cash reserves of Rs 605 crore as of December 31, 2014 and it is proposed that the cash be split between the three companies such that Max Financial Services will hold Rs 150 crore, Max Ventures Rs 10 crore and the rest, likely to be over Rs 400 crore, held by the newly formed Max India. There is a plan to make a voluntary open offer for buying up to an additional 34.5 per cent stake in Max Ventures and Industries, which will be listed after the demerger.
 
Max Speciality Films Ltd (MSFL), established in 1990, manufactures flexible polymer films for multitudinous applications in food, non-food, industrial packaging, and leather coating films. The vertical is one of the market leaders of specialty biaxially oriented polypropylene films in India.