New Delhi: Chennai-based Shriram Group, the country’s largest used-truck financier with interests in brokerage, life and general insurance businesses, is pursuing low-cost acquisitions in the non-life insurance segment in countries such as the Philippines, Vietnam and Indonesia.
The group, which launched its general insurance subsidiary last month, plans to acquire companies valued at Rs10-20 crore in these markets.
The purchases will be made through Shriram Capital Ltd, the holding company for the group’s financial services.
Small plans: Shriram Group chairman R. Thyagarajan says since the plan is to buy small companies, capital requirement will be less.
“Being small-size companies, capital requirement will be less in these countries,” said R. Thyagarajan, chairman of Shriram Group.
Indian firms have to be cautious while entering new markets overseas, said Sanjay Aggarwal of consulting firm KPMG. “Overseas markets are fairly unknown territories...it will still take a lot to gain appropriate understanding of new markets.”
Shriram Group’s plans to acquire non-life insurers overseas dovetail with increasing competition in the domestic market.
Since January, following a decision by the Insurance Regulatory and Development Authority of India, or Irda, to remove price controls on non-life insurance products, premiums have dropped sharply.
Last year, the regulator allowed limited price freedom to general insurance players. Since then, the general insurance business has seen a drop of 40-50% in premium rates for fire and engineering policies.
The going has been tough for the health insurance segment as well. For every Rs100 collected in premiums until a year ago, health insurance firms have said they were typically paying out claims of Rs120-140.
Shriram General Insurance Co. Ltd, or SGICL, the group’s general insurance unit, has decided to stay away from corporate and health insurance, citing the intense competition. SGICL will, for now, focus on retail customers, including its large retail base of truckers, the company said last month.
The general insurance segment grew by 12.53% in 2007-08 from a year ago. The 13 non-life insurers in the country collected Rs28,131 crore in premium in fiscal 2008 compared with Rs24,998 crore in the previous fiscal year, according to Irda data.