L&T buys Chola mutual fund business. Chola Wins

At last,the Murugappa Group has realised its folly. It was doggedly hanging on to its mutual fund business, losing money hand over fist. Group companies support not withstanding, the size refused to grow. Performance middling, bloated staff strength and lack of shelf space in financial services. Now that they have sold it off to L&T, the next act would be to sell off what still remains in the Financial services space. It is sad, that of all the Chennai based fiancial services firms, Chola, with its staid though solid group backing, has been a disaster. Inability to think long term in this business, lack of risk management and a greed for moneylender type returns are not what will give you strength. Plus, unlike Sundaram which was focused, or Shriram(inspite of all the troubles it went through)which created a niche in second hand vehicle finance, combined with a big retail footprint in the south, Chola was a boutique which went sour.
For the Murugappa group, the situation would improve further once they also exit the financing business by selling out fully to DBS. That business is unviable and I doubt if the group likes loss making businesses.
Now, they should be very happy that someone has been stupid enough to pay Rs.45 cr for a handful of mutual fund schemes. For the buyer, I doubt if the non-group assets would be of any significant size and the 45 crore may actually turn out to be a huge percentage of the AUM that is non-group.
Now, L&T, has got a bunch of 80 odd employees and a new business which they cannot ever hope to make money out of till they exit the same. Maybe, with their brand, they will be able to rope in a crazy foreign partner who will pay a fortune to get in to bed with L&T.
As a business, there is absolutely no sense for L&T to get in to. Unless they think that the L&T brand will pull in a huge AUM and they can use the financial clout to get cheaper money for L&T Finance.