The Hindu Business Line : Cholamandalam MS targets SMEs to drive volumes

WITH small and mid-cap enterprises accounting for 40 per cent of the country's GDP, 35 per cent of exports and employing 20 million people, Cholamandalam MS General Insurance Company Ltd has stepped into the SME segment to increase its volume of business this year.

The company plans to increase its bouquet of offering by adding two products (variants to the existing offerings) and a couple of new lines in two months, Mr Arun Agarwal, Managing Director, Cholamandalam MS, told Business Line. He said the company was in the final stages of discussion with the Insurance Regulatory Development Authority (IRDA).

Cholamandalam MS is a joint venture between the Chennai-based Murugappa Group and the Japan-based Mitsui Sumitomo with a 76:24 partnership. Operations commenced in October 2002.

The joint venture has in place 39 products, two Web portals (motor and travel) and one general purpose portal for commercial lines. Mr Agarwal said the joint venture is also in talks with six more banks for the distribution of its products. He said that it was concentrating more on the West and South.

Mr Agarwal also said the company was in talks with two major banks, which will give it an all-India coverage.

Currently, the company has tied up with six banks for product distribution.

On the SME segment, Mr Arun said it had sold about 4,000 policies across the country in this segment, with western India contributing to 50 per cent of the sales. The target is to touch 20,000 policies. Mr Agarwal said this would bring in revenue close to Rs 40 crore.

The joint venture, which has a customer base of 3.5 lakh, has sold about 4.5 lakh policies and is targeting sales of five lakh policies by the end of the current fiscal.

Mr Agarwal noted that out of the total revenue of Rs 5,277crore recorded last year, Rs 97 crore had come in from the insurance segment. The target for the current fiscal is Rs 230 crore.

Mr Agarwal pointed out that as per Nasscom estimates, approximately 60 per cent of the IT industry revenues would come in from the SME segment by 2008.

IT, auto components and service sectors would be the thrust areas while the industrial belts in Western India would be the prime targets. These include the industrial parks of Pune, Aurangabad, Nashik, Solapur, Jalgaon, Nagpur and Kolhapur.

He said the company has a pan-Indian presence in about 15 locations, which is expected to be increased to 17 with the inclusion of Baroda and Surat by the end of the current fiscal.

Mr Agarwal said that it offered various packages to the SME segment, catering to their special needs. Foremost among them is the enterprise package policy - a single policy offering coverage to all elements of the company - namely infrastructure, human resources, technology and logistics. He also pointed out that all the general insurance requirements could be completed through a single premium and through a single date for policy renewal.

Mr Agarwal said the company has about 1,000 agents catering to customers across 200 towns and this is expected to be ramped up to 1,500 agents to cover 50 more towns.

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