On May 23, 2006, Pantaloon Retail (India) Limited (Pantaloon) announced its plans to form a joint venture (JV) with Italy based Generali Grouphttp://www.icmr.icfai.org/Business Updates/Pantaloon Forays into Insurance.htm#_ftn1 (Generali) to tap the insurance sector in India. The venture would be called ‘Future Generali’ and would be headquartered in Mumbai. Generali would have a 26% stake in the venture. The venture was expected to offer both life and non-life insurance products.
The proposed JV had yet to receive approval from the Insurance Regulatory and Development Authority of Indiahttp://www.icmr.icfai.org/Business Updates/Pantaloon Forays into Insurance.htm#_ftn2 (IRDA). It was reported that Pantaloon would invest Rs 250 million in the JV. The agreement was signed between the two companies as they saw a lot of potential in the Indian insurance sector.
It was reported that the insurance market in India had an annual growth rate of 16% in life segment and 10% in the non-life segment since 2000. Pantaloon and the Generali group further expected a growth of 15% to 20% for the next fifteen years in the Indian insurance sector due to the deregulation of the financial services sector and high savings ratio in India.
Pantaloon’s foray into insurance was part of the group’s diversification strategy. In March 2006, the Pantaloon Group renamed itself as the ‘Future Group’. Future Group was divided into six verticals - Future Retail, Future Capital, Future Brands, Future Space, Future Media and Future Logistics. Pantaloon would now be under Future Retail.
The Future Group planned to operate its insurance business through its financial arm, Future Capital, which was involved in asset management. Future Capital also had plans to get into credit and other consumer related financial services such as banking, personal finance, and investment services.
Pantaloon planned to leverage its retail strength to acquire customers and understand their insurance needs. Kishore Biyani, CEO, Future Group said, “We already cater to the spending Indian customer through our retail, food, and entertainment business. This is exciting because for the first time we will be looking at his savings and investment needs too.
He further added, “India is a very young country with 60 percent population below 30 years of age. These are the new insurance buyers of India tomorrow who spend a significant time at modern retail outlets (stores and malls). This year we expect to have more than 100 million customers visiting our stores which number is likely to go up to 180 to 200 million by next year.
We are delighted to join hands with Generali who has experience of working with retailers in other parts of the world and expect to cater to the insurance needs of young India.”Future Generali aimed to distribute its insurance products by utilizing Pantaloon’s wide distribution network of retail chains In India, Generali planned to adopt a multi-channel distribution strategy by using distribution channels like agents, banks, internet, and hypermarkets .
Pantaloon also had plans to enter into a tie-up with an airline or a travel company to set up a travel desk in its Central malls across the country. Central Mall chief relationship manager Jaydeep Shetty said, “While it would give a national distribution presence for the airline companies, it would result in a higher proportion of spending per consumer at the Central stores.
We are targeting leisure travelers and not our usual customer. The tickets will be sold at market rates and not lower than prices offered by travel agents or on the internet.”http://www.icmr.icfai.org/Business Updates/Pantaloon Forays into Insurance1.htm#_ftn6In addition to its existing line of businesses, Pantaloon had plans to enter into e-retailing by launching its e-retail portal, www.futurebazaar.com.
Experts opined that Pantaloon’s entry into the insurance sector would further intensify the competition in an industry which already had large business entities like the Tata Group, Birlas, and Reliance Industries (Anil Dhirubhai Ambani Group).
The foreign companies saw a lot of untapped potential in the Indian insurance market as the insurance industry along with banking services contributed just 7% to India’s GDPhttp://www.icmr.icfai.org/Business Updates/Pantaloon Forays into Insurance1.htm#_ftn7and had the potential to grow further.
The proposed JV had yet to receive approval from the Insurance Regulatory and Development Authority of Indiahttp://www.icmr.icfai.org/Business Updates/Pantaloon Forays into Insurance.htm#_ftn2 (IRDA). It was reported that Pantaloon would invest Rs 250 million in the JV. The agreement was signed between the two companies as they saw a lot of potential in the Indian insurance sector.
It was reported that the insurance market in India had an annual growth rate of 16% in life segment and 10% in the non-life segment since 2000. Pantaloon and the Generali group further expected a growth of 15% to 20% for the next fifteen years in the Indian insurance sector due to the deregulation of the financial services sector and high savings ratio in India.
Pantaloon’s foray into insurance was part of the group’s diversification strategy. In March 2006, the Pantaloon Group renamed itself as the ‘Future Group’. Future Group was divided into six verticals - Future Retail, Future Capital, Future Brands, Future Space, Future Media and Future Logistics. Pantaloon would now be under Future Retail.
The Future Group planned to operate its insurance business through its financial arm, Future Capital, which was involved in asset management. Future Capital also had plans to get into credit and other consumer related financial services such as banking, personal finance, and investment services.
Pantaloon planned to leverage its retail strength to acquire customers and understand their insurance needs. Kishore Biyani, CEO, Future Group said, “We already cater to the spending Indian customer through our retail, food, and entertainment business. This is exciting because for the first time we will be looking at his savings and investment needs too.
He further added, “India is a very young country with 60 percent population below 30 years of age. These are the new insurance buyers of India tomorrow who spend a significant time at modern retail outlets (stores and malls). This year we expect to have more than 100 million customers visiting our stores which number is likely to go up to 180 to 200 million by next year.
We are delighted to join hands with Generali who has experience of working with retailers in other parts of the world and expect to cater to the insurance needs of young India.”Future Generali aimed to distribute its insurance products by utilizing Pantaloon’s wide distribution network of retail chains In India, Generali planned to adopt a multi-channel distribution strategy by using distribution channels like agents, banks, internet, and hypermarkets .
Pantaloon also had plans to enter into a tie-up with an airline or a travel company to set up a travel desk in its Central malls across the country. Central Mall chief relationship manager Jaydeep Shetty said, “While it would give a national distribution presence for the airline companies, it would result in a higher proportion of spending per consumer at the Central stores.
We are targeting leisure travelers and not our usual customer. The tickets will be sold at market rates and not lower than prices offered by travel agents or on the internet.”http://www.icmr.icfai.org/Business Updates/Pantaloon Forays into Insurance1.htm#_ftn6In addition to its existing line of businesses, Pantaloon had plans to enter into e-retailing by launching its e-retail portal, www.futurebazaar.com.
Experts opined that Pantaloon’s entry into the insurance sector would further intensify the competition in an industry which already had large business entities like the Tata Group, Birlas, and Reliance Industries (Anil Dhirubhai Ambani Group).
The foreign companies saw a lot of untapped potential in the Indian insurance market as the insurance industry along with banking services contributed just 7% to India’s GDPhttp://www.icmr.icfai.org/Business Updates/Pantaloon Forays into Insurance1.htm#_ftn7and had the potential to grow further.