The Hindu Business Line : It's value investment, says Gujarat Ambuja

INDUSTRY watchers were rather surprised at the Gujarat Ambuja Cements' move to acquire 14.87 per cent stake in ING Vysya Life Insurance Company for Rs 60.9 crore.

Is the fourth largest cement manufacturer in the country interested in entering the insurance industry or would the acquisition merely be an investment? Officials at the company have been rather non-committal.

This is a small amount that Gujarat Ambuja is investing, said a senior official with the company: "Insurance is a growing sector; and over a period of time one can unlock more value."

This might suggest that its interest in the insurance company might be purely financial. But then the official added. "We have experience in cement retail and insurance is also a retail industry."

Officially too, the company's response did not reveal much. "We are excited to acquire this stake in ING Vysya Life at a time when the private insurance sector in India is growing rapidly, as seen by the industry's increase in premium income of 129 per cent in the fiscal year 2004-2005," said Mr Anil Singhvi, whole-time Director, GACL, quoted in a news release.

Gujarat Ambuja will take one seat to join the current nine-member board of directors of ING Vysya Life, according to a news release. But as a substantial investor, it would be entitled to a directorship and this too need not suggest an operational interest in insurance, said industry observers.

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