RELIGARE SET TO FORAY INTO NON-LIFE SECTOR

Mumbai: Religare Enterprises (REL), promoted by Malvinder Singh, CEO of Ranbaxy, is proposing to raise Rs 1,075 crore through a combination of either global depository receipt/ American depository receipt/ qualified institutional placement/ foreign currency convertible bonds and equity shares or warrants to promoters or promoter-entities.
A spokesperson for REL, which is one of the largest broking houses in the country, said the fund raised could be used for working capital requirements and will also enhance the firm's net worth.
The board has also approved Religare's entry into the non-life insurance sector and the company has started scouting for partners. KPMG has been given the mandate to look for possible partners.
Malvinder Singh has recently sold the promoter family's stake in Ranbaxy to Japan's Daiichi Sankyo for Rs 19,780 crore. Singh has said that the promoters want to pump money into Religare and Fortis to make them the top firms in their respective sectors. "Healthcare and financial services are two focus areas for us," Singh had said.
Recently, Religare Capital Markets International UK, an indirect subsidiary acquired Hichens, Harrison & Co. Plc. The company has also received the in-principle approval from Sebi for being the sponsor for an asset management JV with Aegon (50:50) and has put in place its core team and will shortly apply for the final license.
The broking house has posted a profit after tax (PAT) of Rs 91.97 crore for 2007-08, up 270 per cent from that in the corresponding period last year. The financial services company has seen its PAT margins grow from 7.77 per cent in FY07 to 10.26 per cent in FY08. The board has recommended a final dividend of 11 per cent, or Rs 1.1 per share, for the face value of Rs 10 each share.
The company has made a loss provision of Rs 13.5 crore for the financial year 2007-08. The provision was made in its subsidiaries Religare Finvest and Religare Securities on account of bad debts arising out of margin funding and client defaults.
With Religare's provision, the total loss provisions by stock brokers in the country has reached Rs 63 crore. Earlier, Prime Securities made the highest provision of Rs 23 crore and J M Financial made a provision of Rs 12 crore. The maximum losses for stock brokers are arising out of the margin funding business, which went for a toss after the market meltdown since the start of 2008.
Meanwhile, the Reserve Bank of India has cancelled the certificate of registration granted to Fortis Financial Services as the company had voluntarily approached for the cancellation of the the NBFC licence.
When contacted, an official spokesperson for the company said ,"We have asked for the cancellation as Fortis Financial Services is changing the line of business to technology."

Source: Business Standard