Max Group embarks on expansion drive
Lays down a roadmap to cross US$ 5 billion mark in revenue by FY 11-12
- Life Insurance: Restructures its joint-venture arrangement with New York Life; becomes the first life insurer in India to declare Embedded Value; plans accelerated growth for life insurance business; increases peak capital commitment significantly
- Healthcare Insurance: Forays into health insurance in a joint-venture with BUPA Finance Plc., UK
- Healthcare: To double the bed capacity to 1,500 beds by 2010; increase service offerings to include Oncology and Infertility
Speciality Packaging Products: To boost production capacity by adding two thermal film lines; non-binding MoU with a world leader for manufacture and distribution of thermal films
Max India today announced accelerated growth plans and certain recent developments for the Group, which it believes will add significant value to its shareholders. The growth plans, mainly driven by significant expansion for the life insurance business, have the potential to achieve US$ 5 billion in revenue by FY 11-12.
Max India has restructured its joint venture with New York Life. The Company has modified the terms of option available to New York Life for purchase of 24% stake in Max New York Life. Under the revised arrangements, New York Life has an option to buy up to an additional 24% stake and increase its shareholding in Max New York Life. This option will be valid for a period of 8 years and priced on a fair market value based formula, less discount of 10%, as against an earlier preferential formula.
This restructuring of joint venture will significantly enhance value for Max India shareholders, here and now. Further, Max India and New York Life have signed off on a significantly profitable growth plan which targets Annualised First Year Premium (new sales) of Rs. 12,000 crore by FY 11-12. The plan also calls for an increase in sales force from 47,000 agents to 300,000 agents and adding atleast 250 offices every year going forward. This will expand Max New York Life’s distribution footprint from 311 offices as at June’08 end to around 900 agency offices and 700 rural offices by FY 11-12. The expansion plan will entail a peak capital commitment of Rs. 3,600 crore, of which Rs. 1,232 crore has already been invested.
To supplement its growth plans, Max New York Life has launched new products in the child benefit, retirement and health segments. On the mass insurance front, Max New York Life has finalised plans to address the insurance and saving needs of 100 million low income population. The initiative is targeted at under serviced households and will be launched pan-India shortly.
Max New York Life also declared embedded value of its life insurance business, becoming the first life insurer to disclose this. It has estimated the embedded value, represented by aggregate of adjusted net worth and present value of future profits of the in-force business, to be Rs. 1,316 crore as at March 31, 2008.
Max India announced its plans to tap the health insurance opportunity in India. It will create a new stand alone joint venture for health insurance with the BUPA Finance Plc., UK, a leading global health and care organisation. The initial share capital of the JV will be Rs.100 Crore, with 50% equity participation by Max India. Bupa group will have a 26% shareholding in the JV, while the balance 24% will be held by Mr. Analjit Singh and his family through certain intermediate companies. The joint venture called Max Bupa Health Insurance Limited will offer a suite of products to both retail and business customers.
Max Healthcare is on track to double the bed capacity of its business to 1,500 beds by 2010 by adding three more facilities in the National Capital Region (NCR) of Delhi and one outside the NCR region i.e. in Dehradun. These hospitals will see Max Healthcare expanding its service offerings to include Oncology and Infertility. A 270-bedded tertiary care facility in Patparganj (East Delhi), 100-bedded tertiary care facility in Saket (South Delhi) and 100-bedded facility in Dehradun (North India) will be set-up by second half of 2009. Another 300-bedded facility will be added in Shalimar Bagh (North-west Delhi) by last quarter of 2010. Meanwhile, existing facilities in Max Healthcare’s network also turned EBITDA positive at Rs. 20 crore in FY 07-08 on a revenue base of Rs. 372 crore. Current revenue run rate is at an annualized Rs. 400 crore per year.
Speciality Packaging Products
Encouraged by the speciality packaging products business achieving 100% utilisation within a year of tripling capacities to 29,000 TPA, Max India has drawn up plans to expand the business further. To begin with, it will add two lines for production of thermal films. It has signed a non-binding MoU with a world leader for manufacture and distribution of thermal films. The first thermal film production line will be operational in October 2008 followed by second in August 2009. Max India is also planning for fourth BOPP production line with a capacity of 20,000 TPA by early 2010.
Clinical Research business is witnessing traction with its revenue and order-book growing multi-fold. Backed by increased service offerings, the order-book for the business has grown 140% year-on-year to Rs. 36 crore as at June’08 end. Max Neeman Medical International is targeting to double its revenue to over Rs. 20 crore in FY 08-09 and has already turned profitable in FY 07-08.
For more details contact:
Head – Communications
Max House, Okhla – III,
New Delhi-110 020
Tele # 2693 3601-10 extn. 196
Cell # +91 9873347428+91 9873347428
Max House, Okhla – III,
New Delhi-110 020
Tele # 2693 3601-10 extn. 145
Cell # +91 9873154228+91 9873154228