The Hindu : Business : Peerless chalks out roadmap for new businesses

Online edition of India's National Newspaper
Saturday, Dec 15, 2007
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Business

Peerless chalks out roadmap for new businesses

K. T. Jagannathan

To make foray into mutual funds, life insurance

To distribute
co-branded credit
card with SBI
Inks pact with
IFFCO Tokio
General Insurance

CHENNAI: Having seen 75 summers, Kolkata-based Peerless group has chalked out a fresh roadmap that will see it make a foray into mutual fund, life insurance and credit card fields.

These diversifications are a part of a strategy, driven by the exigencies of time and changes in the regulatory environment, to gradually give Peerless brand a broader profile than let it be known largely as a residual non-banking finance company.

An indication of the group’s search for a broader brand profile for Peerless is already evident from the floatation of assorted subsidiaries, marking its entry into areas such as hotel, broking, financial product distribution and healthcare.

In an interaction with this correspondent, S. K. Roy, Managing Director of Peerless General Finance & Investment Company Ltd., said the group had just begun distributing mutual fund products. However, the group was keen to run a mutual fund of its own.

This would be facilitated through its subsidiary, Peerless Securities, which had already got an in-principle approval for floating an asset management company from the Securities and Exchange Board (SEBI) of India. He was confident that a final approval would come sooner than later.

The group has a presence in over 150 towns across the country. It has been present in Andaman for over a quarter century now and also has a foothold in Jammu and Kashmir.

“We are pioneers in the collection of small savings and distribution of financial products,” Mr. Roy said, justifying Peerless’ move to set up an asset management company. Mr. Roy said though many foreign companies had queued up for alliance, nothing had yet been decided.

Addressing shareholders recently, D. Basu, Chairman, Peerless General Finance, said, “If developed successfully, such business (mutual fund) will enable the company add significantly to the brand image.”

Product distribution

Mr. Roy said Peerless was watching the life insurance scene and hinted that it might get into the life insurance business in the future. A subsidiary company, Peerless Developers, is already distributing the insurance products of Max New York Life Insurance Company. It has just initialled an agreement to distribute the products of IFFCO Tokio General Insurance Company.

The apex bank had, according to Mr. Basu, advised Peerless to “explore alternate business model and migrate to such a model with a period of three years.” Mr. Basu, during his speech at the shareholders’ meeting, had said that the RBI move meant that “the company, as a residual non-banking finance company, would not be accepting new deposits on the expiry of the said three years.”

Peerless had since moved the RBI, seeking longer transition period.

The challenges posed by the transition to a new business model were daunting, Mr. Basu said. A comforting feature, however, was that the company “stands on a firm financial footing now,” he added.

Total collections of Peerless stood at Rs. 1,028 crore during 2006-07. The net owned funds stood at Rs. 693 crore as on March 31, 2007. Maturity payments to depositors totalled Rs. 1,280 crore. And the cumulative payments over the years stood at Rs. 14,168 crore as at the end of March 2007.

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