The Hindu Business Line : Only an investment for us, says Exide

EXIDE Industries today described its acquisition of majority stake in ING Vysya Life Insurance Company Pvt Ltd as an "investment." The company said that it would invest up to Rs 410 crore in IVL in the next 3-4 years.

Though not quite clarifying whether Exide could exit from IVL after a lapse of three to four years, the Chairman, Mr S.B. Ganguly, said that their exposure in IVL would be limited to a maximum of Rs 410 crore.

"We believe that the said capital infusion would be sufficient for IVL during the said period. However, if need be, other stakeholders may be allowed to increase their stake in the insurance outfit."

Asked why Exide had gone for such unrelated diversification, he stressed that the acquisition was merely an "investment of Exide Industries" which has "substantial" free reserves available. "The insurance sector as a whole is doing extremely well and we consider IVL as a good investment opportunity."

Earlier, the company reported that it had acquired 49.3 per cent stake from GMR Industries in IVL. Additionally, the company would subscribe to shares of Rs 28.4 crore to take its holdings to 50 per cent. The additional acquisition is expected to be done through issue of sweat equity or other such preferential arrangements.

To meet the future capital requirements of IVL, the company has also decided to invest Rs 17.5 crore in warrants to be converted into equity of a face value of Rs 175 crore in next three to four years.

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