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Radhika Menon
Sharvari Patwa

Mumbai, June 5 As Sahara India Financial Corporation Ltd (SIFCL) finds itself in the eye of a regulatory storm, it raises crucial questions on the fate of its insurance and mutual fund subsidiaries which have not been able to make inroads in their areas of operation.

Sahara Life Insurance, which was set up in October 2004, has not kept pace with the insurance industry which has made rapid strides.

The company posted new business premium of Rs 21.81 crore in 2005-06, Rs 43.17 crore in 2006-07 and Rs 122.17 crore in 2007-08.

In comparison, a company like Shriram Life which started operations only in 2006 brought in Rs 310 crore premium in 2007-08.

Sahara Mutual Fund was incorporated in 1996 and has Sahara India Financial Corporation as its sponsor. In the case of Sahara Mutual Fund, the company’s assets under management which were at Rs 233.15 crore in October 2003, now stand at Rs 198.14 crore (May 2008), according to AMFI data.

Sources at Sahara Life Insurance said that the group did not place much emphasis on the life insurance and mutual fund businesses since they were seen to be conflicting with the group’s promoter company Sahara India Financial Corporation Ltd which collected deposits as a non banking financial company.

A consultant who has worked with the Sahara group said that the key impediment in the growth of both the life and mutual fund business was that the Sahara Group has been unwilling to commit capital for expansion.

“For the growth of a life insurance or mutual fund company, the setting up of the branch network and an agency force is extremely crucial. The Sahara group chose to focus on its RNBC and real estate businesses,” said the consultant.

Sahara Life Insurance currently has a capital base of around Rs 232 crore. It has around 55 branches and 12,000 agents.

Brokers say that there is little investor interest in Sahara Mutual Fund. “It is a very small fund house and they might have found some takers in the Uttat Pradesh region. Also, they are not very aggressive players in their business", said a dealer with a broking firm.

Adds an analyst at a rating house, “Investors are uncomfortable if the fund does not offer good returns. This may be one of the reasons that the Sahara mutual fund business is not doing well.”

More Stories on : Life Insurance | Mutual Funds

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