IRDA to issue IPO norms for general insurance in two months

New Delhi: The Insurance Regulatory and Development Authority (IRDA) today said it would finalise guidelines for initial public offer (IPO) by general insurance companies in a couple of months, reports PTI.

As for life insurance, the guidelines are almost ready and would be out shortly, it added.

"As regards the non-life companies, a lot of work has to be done on valuation and (guidelines) should be ready in a couple of months," IRDA chairman J Hari Narayan told reporters on the sidelines of a Federation of Indian Chambers of Commerce and Industry (Ficci) conference here.

He said the proposed IPO guidelines for life insurance firms are currently being examined by a SEBI body and will be issued shortly.

"As far as the life industry IPO guidelines are concerned, the matter is very advanced and is currently with a body of SEBI. So, it would be coming out shortly," he said.

When asked whether the proposed guidelines would have a provision that insurance companies will have to be in operation to float IPO, he said, "Yes, this is the government norm".

As per the Insurance Act, promoters having 26% stake can offload equity after 10 years of operation. The legislation also empowers the government to reduce the mandatory period.

IRDA had already notified the disclosure norms, necessary for providing details about the operations and balance sheets on quarterly and yearly basis. The IPO guidelines will deal with minimum norms that a company must fulfill before hitting the capital markets.

Besides, the state-owned Life Insurance Corporation, 22 private companies are offering life insurance policies. The general insurance sector has 21 players which include four state-owned companies.

Several private sector insurers, including Reliance Life and HDFC Standard Life, have shown interest in tapping the capital market to augment their resource base.


Shopper’s Stop turnaround continues

The retail chain opened two new stores last week in Bhopal and Bengaluru. Its same store sales growth was 21%, which was a key factor that led to a jump in net profit

Shopper’s Stop Ltd reported a net profit of Rs10 crore and business turnover of Rs385.7 crore in the first quarter of the current fiscal. The company points out that same store sales growth (21% in the first quarter of the current fiscal) is a key factor which led to such dramatic profit figures.

“Our same store sales growth is 21% quarter-on-quarter basis, which is a big factor that contributed to growth in net profit. We reported marginal growth by 50 basis points; operating cost is down by 100 basis points; lease rental is down by 160 basis points; depreciation is down by 30 basis points and interest cost is down by 90 basis points on a quarter-on-quarter basis. All these factors constituted an increase in earnings before interest, taxes, depreciation and amortisation (EBITDA) figures from Rs15 crore to Rs25 crore and 297% jump in net profit,” said Govind Shrikhande, customer care associate and managing director, Shopper’s Stop Ltd.

The retail chain recently opened two new stores last week in Bhopal and Bengaluru. Earlier, it opened two stores in April 2010 — one in Amritsar and one in Malleswaram (Bengaluru). “We are still on track to open more than 10 stores in this current fiscal and add 5 lakh sq ft, by the end of this fiscal,” said Mr Shrikhande. 

The company opened four new stores in the last three months (starting from April 2010 till July 2010).

The company is opening its next stores in Ahmedabad, Aurangabad, New Delhi, Durgapur and Mysore. In the next three years, the company will be operating in 26 cities, out of which eight to nine (outlets) will be in Tier-II cities.

“We are expanding in Tier-II cities because we have received a good response from our stores in Lucknow and Jaipur. We are opening a second store in Jaipur,” said Mr Shrikhande.

In the first quarter which ended in June 2010 of the current fiscal, same store volume growth increased to 13.2%, combined with an average selling price increase of 2.9% on a quarter-on-quarter basis.

The company has decided to close down the ‘Arcelia’ format stores as it is an unprofitable store and unviable venture. Arcelia stores were targeted primarily towards women with brands in the categories of cosmetics, jewellery, watches, bags, footwear and sunglasses. It has currently one operational Arcelia store in Pune which it plans to shift to the new departmental store opening up in Pune soon. 


Fortnightly Market View: Fasten Your Belts

By the time you read this article, the market may be nearing the end of its  two-month rally

At last, after 15 weeks of going up and down, the market crossed the high of 15th April. Two weeks ago, I wondered whether a trend change was imminent, though I wasn’t sure. I had said, the Sensex, “has traded in a very tight range over the last three weeks and is now about to head higher.” I had also suggested that “a new short-term global rally has started and the market is headed higher. There is a likelihood that the short-term high would now be around 18,300 on the Sensex. If it crosses that, we are in for a major extended rally driven by global liquidity that would defy all logic.”

The global rally was, however, a halting one and a mixed affair. The US market has barely budged while the Chinese and the Japanese markets have continued to decline. But once it was clear (around Thursday, 22nd July) that the US market was decisively headed higher, all global markets made a fresh upmove. We had said last week that, after a brief rally that is currently under way, global markets would swoon. Hence, to participate in the current upmove, buy the declines, not the momentum. And also run for the exit fast because a big decline may happen any moment. We still maintain this view. This strategy of buying the declines would have paid off very well last fortnight when the market went up and down in a tight range for days together.

Now that the Sensex has broken out of its tight range to higher levels, do we have a major rally on our hands? Not quite. The strategy remains the same—buy the dips because the endpoint of the current rally is still around 18,300 on the Sensex. You don’t want to chase this market as it rises further. But since the entire market is now watching this figure of 18,300, it may peak out before it reaches there. From a low of 15,960 it hit on 25th May, the Sensex has rallied by 2,200 points already. Each rally, in the last one year, has been of 2,000 points. We have gone beyond that; and it is hard to see how we can head higher without a longish and substantial correction.

In short, while we continue with the cautiously bullish stance, we are aware that a downside break can come any day. In fact, the chance of a correction, sometime in early August, is quite high. This could be substantial (about 1,500 points); so be prepared to run for the exit. This is why we have become neutral in our medium-term outlook. And when do we know that we are wrong? If the Sensex blasts past 18,300 easily. The next target would then be 19,000.



Shantilal Hajeri

6 years ago

Dear Madam,
The advice of the experts regarding stock market is freeely available tothe investing public. FIIs/DIIs have their own experts.
If every body wants to do the same thing how can there be a trade?
Let us assume that it is 100% sure that the sensex will fall by 2000 points. Everybody wants to exit the market. Nobody will be ready to enter. Naturally the existing customers cannot exit. Since the supply is more than the demand, the sensex will any how fall. The experts can claim that what they predicted came true.

I am of the opinon that the market would have behaved in an enitrely different way if there were no expert advices. The expert advises influence the market.



In Reply to Shantilal Hajeri 6 years ago

Thats precisely the reason why different experts have differing views

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