CHENNAI: With Reliance Industries buying out Bharti Enterprises' 74 percent stakes in two insurance joint ventures -- Bharti Axa Life Insurance and Bharti Axa General Insurance, the question that begs an answer now is how the acquirer would rename the two companies.
With the Bharti group exiting the insurance companies, its name normally will not figure after the acquisition is completed.
The deal between Bharti and Reliance Industries will not disturb the French group Axa's 26 percent holdings in the two insurance companies.
Names of major ventures of the Reliance group always start with the word 'Reliance'. But the Mukesh Ambani-led Reliance Industries will find it difficult to rename the two acquired insurance companies with the word 'Reliance' as a part, industry sources told IANS preferring anonymity.
The Anil Dhirubhai Ambani Group (ADAG) led by Anil Ambani, younger brother of Mukesh, already operates life and general insurance companies under the name Reliance Life Insurance Company Ltd and Reliance General Insurance Company Ltd.
According to Company Law, similar sounding names will not be permitted for usage. It is more so in the case of financial services business that deals with long term savings of the people.
"The word Reliance has good brand equity in the business field. It will be interesting how Reliance Industries plans to leverage that brand equity. Perhaps RIL Axa could be one way out," sources said.
Meanwhile, employees of Bharti's two insurance companies have been intimated about the stake sale.
According to industry sources, the insurance regulator has also been intimated about the stake sale.
Naming of RIL's insurance venture will be interesting
CA ADITYA SHARMA (CA IN PRACTICE ) (16719 Points)
11 June 2011
CAclubindia
