INDIA'S IFFCO-TOKIO GENERAL INS. MULLS CAPITAL STRUCTURE CHANGE

India's Iffco-Tokio General Insurance will decide on whether it will alter its capital structure once the industry regulator notifies the IPO guidelines for insurance firms, a senior company official said on Thursday.

"The change in the capital structure will be guided by regulation to be brought out by Irda. We are waiting for [regulators] to come out with (IPO) guidelines," Iffco-Tokio General Insurance managing director S. Narayanan said on the sidelines of the 10th anniversary celebrations of the company here.

"We are waiting for some clarity on government's views (on FDI ceiling). We are prepared, as and when guidelines come our position will be clear," he said when asked whether the company plans to come out with a public offer.

As per existing regulations, an insurance firm can only come out with an initial public offer after ten years of operations.

The 6AA provision of the Insurance Act specifies that Indian promoters having more than a 26 per cent stake in an insurance firm has to reduce it in some appropriate manner after 10 years.

Insurance Regulatory and Development Authority (IRDA) is in the process of finalising the IPO guidelines. Meanwhile, market regulator SEBI had separately approved disclosure and accounting norms for initial public offers (IPOs) in October.

As per the draft guidelines prepared by the IRDA only those insurance companies that have been in operation for 10 years will be eligible to come out with IPOs.

The present IPO guidelines of the Securities and Exchange Board of India (SEBI) also require companies seeking to come out with a public issue to have maintained a track record of profits for the past three years.

However, most insurance companies in the country are yet to break-even and thus are not eligible to come out with IPOs under the present norms.

Iffco-Tokio, a 74-26 per cent joint venture between Indian Farmers Fertiliser Cooperative Ltd (Iffco) and Japan's largest insurance group, Tokio Marine and Nichido Fire Insurance Company, expects to register a profit before tax of Rs 50 crore during the current fiscal year.

"We aim to achieve a Gross Written Premium of Rs 2,750 crore (US$611 million), with profit before tax of around Rs 150 crore by 2013-14," Narayanan said.

The health insurance and automobile sectors are likely to be the major drivers of growth, he added.