We are not saviour of the bourses: Chairman
The country’s largest domestic institutional investor, Life Insurance Corporation, keeps a distance when it comes to daily working of companies in which it has a significant stake.
Indications are that LIC will deploy an incremental Rs 2.4 lakh crore in securities this fiscal.
Of this, about Rs 45,000 crore is expected to be incremental in equities. The balance will be new investments in debt, and reinvestment of redeemed debt, dividends and profit from sale of equities.
In the past fiscal, incremental investment was about Rs 2 lakh crore.
As of March 31, 2011, total investment in securities was close to Rs 11.47 lakh crore.
D. K. Mehrotra, Chairman, LIC, said, “We are a long-term investor. We go by our own norms and do not interfere in their day-to-day working. In any case, we have our nominee directors in companies where we have a significant stake to take care of our interest. They have a clear mandate to protect our interest. Any decision that affects the interests of the organisation, we will definitely have a look at it. If it is a matter internal to them, we are okay with it.
“Further, our investment is based on the performance of the company vis-a-vis their competitors, market scenario, corporate governance, track record and future earning. We normally do not get influenced by internal happenings.”
Mehrotra brushed aside the market perception that LIC is the saviour of the bourses.
“We do not save anybody or pull anybody down. It is a commercial decision.When the market comes down, we get a very good buying opportunity. We get very good scrips at a reasonable price, so we pick it up. And, when the market goes up, we have an opportunity to exit and book profits. We never see ourselves as a saviour when the markets tumble.
“It is in my personal interest to get good scrips. May be, in the process, if somebody is salvaged, it is incidental. My main idea is to get good scrips when the market is down,” he added.
On LIC’s holdings in UTI AMC and LIC Nomura MF, he said LIC is a shareholder in UTI as it holds a part of the government’s stake. Secondly, it has only retired people on the UTI board, and they carry out the same duties as expected of any LIC nominee director.
The Securities and Exchange Board of India’s rules state that one entity should not sponsor two fund houses. LIC was one of the promoters of erstwhile UTI which is now UTI AMC. The insurer has also recused itself from a board seat stating that it is interested only in investment.