The Hindu Business Line : `Cholamandalam MS General to break even this fiscal'

The company earned a premium income of Rs 170 crore in 2004-05 while posting a loss of about Rs 3 crore. This year, Mr Arun Agarwal, Managing Director, has set a stretch target for himself and his team. "We can't afford to be complacent in such a competitive market," he says.

Mr Agarwal says, "The market is a great teacher, a great leveller. You can't approach the market with preconceived notions. You have to keep going back to it and listen to it - It tells you what's to be done and what's not to be done."

Excerpts from the interview.

What is your target for premium income for the current year?

We are hoping to reach about Rs 300 crore.

We have seen general insurance companies break even in the third or fourth year of operations. How about your company?

This is our third full year of operations. We hope to break even this year.

What about the impact of the Mumbai floods?

We have had claims of about Rs 70 crore. The Mumbai floods have impacted our profits. To that extent it has made our task difficult. But we are working hard to get back close to our original plans.

Where is your income going to come from?

We have followed a proper product mix from the beginning. We will ensure that income from the motor portfolio will be under 30 per cent of our total premium. The property business will give us about 35 per cent while the health portfolio will give us about 9 per cent and the balance will come from others such as travel insurance, accident, transit and liability products. In terms of segmental mix, about 45 per cent will be from retail and the rest from corporate.

How big is your agency force?

We have 1,500 agents now . We will increase that number to about 1,800 this year.

How much business would you derive from the Murugappa group?

We expect to get about Rs 10 crore of income this year.

Would you be increasing your capital base this year?

No. We feel the Rs 142 crore that we have now is sufficient at this point.

How has your experience been in the de-tariffed markets?

The market is a curious place. When part of the portfolio is tariffed and some part is non-tariffed, then one cross-subsidises the other. But when you move to a free market, then the element of cross-subsidy disappears and each risk stands on its own merit. This will happen from January 2007, for which the regulator has given a roadmap.

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