A joint statement issued by DCM Shriram vice-chairman and managing director Ajay Shriram and Royal & Sun Alliance chief executive India Liaison Office Anthony Jacob said: "The decision has been arrived at in the light of the changed business scenario since we signed the memorandum of understanding four years ago."

"We at DCM Shriram have undertaken major initiatives to restructure operations and focus on our core businesses. The company has recently restructured its business into strategic business units and are pursuing this strategy to focus and consolidate its existing businesses. We have had a very close relationship with Royal & Sun Alliance and had hoped to enter the insurance sector together. However owing to the changing business environment, our priorityis to focus on our core businesses,'' said Ajay Shriram.

According to Jacob, "Both DCM Shriram and Royal & Sun Alliance recognise and appreciate each others divergent strategies and have agreed to a mutual parting of ways. We had hoped to enter the Indian market together, but DCM Shriram has decided to focus on its core businesses. We remain committed to India as a market, which we wish to enter as soon as the government permits participation by foreign companies. We are currently in discussion with a number of companies for a possible partnership agreement."

Royal & Sun Alliance is one of the world's largest non-life international insurance companies. The company's 1997 premium income totalled 9.2 billion worldwide. The company has total assets of over 60 billion and operations in more than 55 countries.

DCM Shriram, with gross sales of Rs 700 crore managed by Ajay and Vikram Shriram, manufactures urea, caustic soda, PVC resins and compounds, cement, sugar, yarn and power at its complexes in Kota andTonk in Rajasthan, Bharuch in Gujarat and Lakhimpur Kheri in Uttar Pradesh.