SRS to launch Rs225 crore IPO next month

SRS will issue around 3.5 crore equity shares under the IPO

Faridabad-based SRS Ltd, which has interests in cinema exhibition, retail and food courts, said it will launch an initial public offer (IPO) to raise up to Rs225 crore by next month.

The company will issue around 3.5 crore equity shares under the IPO, through which the promoters will dilute a 25.13% stake. The proceeds of the public issue will be utilised to fund expansion plans.

“We have already received regulatory approvals from the Securities and Exchange Board of India and stock exchanges. With the IPO, we wish to raise Rs225 crore to fund expansion across business segments,” SRS Ltd chairman and managing director Anil Jindal told PTI.

The company has roped in SPA Merchant Bankers, IDBI Capital Markets and Karvy Investor Services to manage the issue, which will be carried out through a book-building process.

“By July-end, we will launch the offer,” he added. Jindal said the proceeds from the IPO will be utilised to increase the number of cinema exhibition screens, retail stores, jewellery stores and food courts currently operated by SRS in North India.

“We are adding 54 new cinema screens, 33 new food courts, 29 retail stores and 17 jewellery stores to our existing network,” he said.

At present, the company operates 23 SRS Value Bazaar retail stores, 15 food courts and 30 cinema screens in North India.

“Our focus is to establish a strong presence across business verticals in tier-II and tier-III cities and towns across the country,” Jindal said.

The company also operates five jewellery retail and wholesale outlets and a jewellery manufacturing unit in Delhi.

For the fiscal year ended 31 March 2011, the company’s total turnover amounted to Rs2,042 crore, Jindal said.

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Online mediclaim: Sorry, only 20% off

If online customers carry lower risk, why are they not getting a much cheaper rate?

Health insurance (mediclaim and other products) offer no difference in premium for online purchase. It is unlikely that there will be any major discounts in the future for online health insurance. It could be a maximum of 20% (this figure is based on conversations that Moneylife has had with different general insurers). As mentioned earlier, online term life insurance is offered at a huge discount due to the profile of customers they are choosing. Educated, net-savvy customers will need good healthcare facilities and, hence, it is unlikely that online health insurance products can be offered at a discount to them. Advances in medical science will increase longevity, but may not necessarily lead to better health for all.

According to Subrahmanyam B, vice-president and head, health vertical, Bharti AXA General Insurance, “We will offer online mediclaim in two-three months. As far as discounts are concerned, since we would be in a position to save on acquisition costs by offering policies online, we would like to pass this on to our customers. However, this is subject to approval from the regulator.”

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Term plan: Who wants it?

A term plan is the best form of protection

Life insurance is a ‘push’ product, but have you ever seen life insurance companies advertising term plans or agents pushing them? A random interaction with an insurance agent will reveal that term life is not even offered or discussed in most cases. Even when customers ask for them, agents are vague about them which is their way of dissuading customers. Why is this so?

First, low premium income for insurance companies translates into low commissions for agents. Second, Indian customers generally view premium as a ‘waste of money’ because they naturally hope that nothing untoward will happen to them. For the premium they pay, they want something back from the insurance company. Term plans carry low premium for insurance companies, low commissions for agents and don’t pay anything to insurers. All this has ensured that term plans are the best-kept secret of the insurance world.

The market is dominated by unit-linked insurance plans (ULIPs) which mainly put money in the stock market in different proportions and traditional plans which mainly put money in debt instruments. The worst part is that a majority of customers taking ULIP or traditional plans remain underinsured since a part of their premium is going into investments. The premium earmarked for protection is too low. To get proper protection, their premiums would have to be much higher. Some policyholders have taken traditional policies more than 20 years ago for Rs1 lakh—which is meaningless given the current inflation rate. Life insurance is a way to provide for your dependents in case of your untimely death. It’s a method of transferring your financial responsibility to someone else (the insurer) when you are no longer around. This protection comes at a cost—the premium. If you live a long and healthy life, just count your blessings and forget the money that you paid as premium. Term life is the purest and best form of risk protection.

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