Bharti Enterprises to stay put in insurance, for now
Dec 02 2012 , Mumbai
Firm infuses fresh capital in life and general ventures with AXA
According to two top officials of the company, there is no immediate move to exit insurance. On the contrary, it infused Rs 60 crore in its general insurance joint venture in September. “Bharti for now is looking at growing the business,” one of them told Financial Chronicle.
Together with its joint venture partner, as much as Rs 95 crore has been put into the life insurance business this year.
Bharti Enterprises owns 74 per cent of Bharti Axa Life Insurance and Bharti Axa General Insurance. The balance 26 per cent in both the insurance companies is with French group AXA.
A mail sent to Akhil Gupta, deputy group CEO and managing director of Bharti Enterprises, remained unanswered. A spokesperson of the company refused to comment.
In June last year Bharti Enterprises and Reliance Industries had jointly announced an understanding by which Reliance and Reliance Industrial Infrastructure would acquire Bharti’s 74 per cent in Bharti AXA Life Insurance and Bharti Axa General Insurance.
But in November of that year both Reliance and Bharti announced that the negotiations for the takeover were being terminated. The reason given by Reliance was the two sides’ inability to agree on a long-term vision and joint governance. Now the two Bharti official say the deal was called off due to differences over management control.
Amarnath Ananthanarayanan, CEO and MD of Bharti AXA General Insurance, said, “In April-November Bharti Axa General Insurance earned a gross premium of Rs 500 crore.”
Ananthanarayanan further said, “Our losses have been coming down and we have a loss of Rs 50 crore as at September-end. In 2011-12 the loss was Rs 140 crore.”
“The capital base of the company is Rs 850 crore; Rs 60 crore of which was brought in by the promoters in September. In 2014 we will be a profitable company,” added Ananthanarayanan.
On the other hand, Bharti-Axa Life Insurance had earned premium of Rs 224 crore in the year ended March 31 this year. The promoters added Rs 95 crore this year, taking the capital to Rs 1,746 crore in September. In the shareholder’s account, the loss carried to the balance sheet as on September 30 was Rs 1,847 crore (Rs 1,654 crore a year earlier).
An insurance consultant involved in several acquisitions in insurance space said, “Bharti is into telecom which itself requires substantial capital. So, to be able to continuously infuse capital in the insurance companies seems difficult. Two or three earlier attempts to exit insurance failed. Therefore, in the immediate future Bharti may not be looking at exiting; but may do so after sometime.”