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Birla Sunlife Securities up for sale

June 07, 2003 14:55 IST

The Aditya Birla Group is scouting for a buyer for its broking arm, Birla Sunlife Securities Ltd.

Birla Sunlife Securities is a part of the Birla SunLife Financial Services Ltd, which offers products and services ranging from life insurance and mutual funds to broking, distribution and other financial products.

When contacted, S K Mitra, director, Birla Sun Life Financial Services said: "It is a neat and clean operation that we support. However, since broking is not our core competence, we will not mind exiting the business at the right price. Our core competence lies in the mutual fund and life insurance businesses."

"If we find someone in the long-term business of broking, we are willing to cede the majority of our stake. However, as of today, there are no players willing to buy broking entities. Till then, we will continue with the broking business, in which we have never been aggressive," Mitra added.

According to market sources, the company has seen some employees indulging in financial irregularities. Mitra, however, refuted this. According to him, Birla Sunlife Securities has given the highest return on capital among all the group financial companies, a 45 per cent dividend for the financial year ended March 2003.

Market sources said while the company had done well in fund-based activities, it had not fared as well in fee-based businesses.

The company provides equity and fixed income broking and research services to local and foreign institutions and high net worth private clients. It is a member of the Bombay Stock Exchange and the National Stock Exchange.

Birla Sunlife Securities was promoted by Birla Global Finance Ltd, which was set up as a flagship of the Aditya Birla Group's financial services activities. In 1994, it forged a tie-up with Canadian company Sun life to form joint ventures in life insurance, mutual funds and stock broking.

The way out

  • Broking is no longer seen as a core area.
  • AV Birla group may cede majority stake to established broking player.
  • Market sources said the company did not fare well on fee-based businesses.
Anindita Dey & Freny Patel in Mumbai