FROM a struggling insurance company, the restructured Crescent Star Insurance Company Limited is fast diversifying into uncharted territories.

In the last few years, the company has ventured into food franchising, tracking, technology and the steel sector.

The group now comprises of: Crescent Star Insurance Limited (CSIL)—the core insurance company which is marked as the holding company of subsidiaries Crescent Star Foods (Private) Limited, Crescent Star Technologies (Private) Limited and Crescent Star Luxury (Private) Limited.

Except for the first in which CSIL has a 50 per cent stake, the remaining two are wholly owned subsidiaries.

The company’s largest investment of Rs403 million is in the 30pc equity holding of a PSX listed associated company, Dost Steels Limited.

Envisioned, at the time of its incorporation, as the country’s largest re-bar rolling mill with the capacity to produce 350,000 tonnes per annum, DSL fell upon bad times.

But talking to this writer last Tuesday, Naim Anwar, the managing director and CEO of Crescent Insurance Company, affirmed that the troubling issues had been resolved and the plant was scheduled to go into operation in October this year. He chairs the new board.

The CSIL had issued right shares in 2014 in the sum of Rs499m, comprising 49.9m shares of Rs10 each at a discount of Rs4 per share.

Crescent Star Foods was acquired on June 30, 2016 with the purpose of running fast food restaurants throughout the country and other ancillary activities.

The subsidiary has launched the Texas-based fried chicken chain ‘Golden Chick’ restaurants. The company’s CEO said that plans are afoot to open up 30 outlets in five years.

The company is launching Crescent Star Luxuries (Pvt) Limited, the latest addition to the line of business to market cosmetics, perfumes and luxury items under the brand name of ‘Define’. The doors to the first retail store were thrown open on July 7 this year.

Mr Anwar estimated an investment of Rs300m in the business which he said would market 45 international brands of cosmetics and perfumes with a first of its kind ‘service station’ that would provide a whole range of facilities such as hairstyling and make-up products.

The last released interim (consolidated) accounts and report for the first quarter (January-March 2017) show total assets of Crescent Star Insurance Company at Rs1.4 billion, up from Rs 1.110bn at the same date last year. Investments stood at Rs61m.

The biggest portion amounting to Rs40m was in ‘equities and mutual funds’ while Rs22m were parked in government securities (Pakistan Investment Bonds).

The company carried ‘sundry receivables’ of Rs526m on its balance sheet. The overwhelming sum of Rs395m comprised advance to associated Dost Steels Limited, which carried mark-up at one-year Kibor (Karachi interbank offered rate) plus 3pc per annum.

The paid-up share capital amounted to Rs827m and discount on issue of right shares was Rs200m.

The company’s CEO said that with the completion of the right, which was oversubscribed, the paid-up capital has now risen to Rs1.070bn.

Accumulated profit at end-March was Rs26m, of which Rs22m was attributed to the owners of holding entity, leaving Rs28m to ‘non-controlling interest’. Total equity at March 30 was Rs684m.

While the core insurance business did not fare well owing mainly to the decline in net premium in the ‘motor’ and ‘miscellaneous’ business, it was compensated by ‘investment income’ amounting to Rs82m, which supported the bottom line.

Profit after tax for the first quarter stood at Rs30m with earnings per share (eps) at 59 paisa, up from profit at Rs4.4m and earnings per share five paisa year-on-year — in consolidated condensed comprehensive Income.

In the core insurance sector, the company is underwriting its general insurance business on both conventional lines as well as new schemes.

Insurance cover for, health, fire, marine, engineering, travel, livestock and crop and miscellaneous, have always been the mainstay while the company is now reaching out to individuals and retail clients through various schemes such as ‘Seehat Aasaan’, ‘Car Aasaan’ and ‘Travel Aasaan’.

Mr Anwar lamented the low insurance penetration and density rate of 0.8pc of GDP in Pakistan. He affirmed that there was a great deal of untapped potential, particularly in health benefit plans.

Crescent Star Technologies is in the business of vehicle tracking and fleet management services including supply and installation of devices based on various technologies.

The company’s CEO affirmed that CSIL would continue to concentrate on the business of insurance.

“The management strategy is to move towards individual accounts in sectors of untapped market for retail health backed by technology through the Company’s subsidiary Crescent Star Technologies (Pvt) Ltd; providing call centre services to help support this progressive business,” directors stated in their report for the first quarter ended March.

The accounts for the second quarter (April-June) will be released in due course.

Investors will be watching out for the turn of tide in the insurance business as well as progress on other fronts, mainly the Dost Steel Mills.

With such major diversification in so short a time, investors might still be wondering if the company is biting more than it can chew.

Published in Dawn, The Business and Finance Weekly, July 31st, 2017