Chennai, Jan. 25
LIFE Insurance Corporation of India hopes to build on its biggest asset - its real estate.
Its buildings have had a pride of place in every major city. Take for instance the LIC Building in Chennai; it epitomised the city in the 1960s and 1970s.
A few seconds' shot of the 14-storey building in a feature film was enough to indicate that the story was shifting to Madras, as Chennai was known then.
LIC, second only to the railways in land holding, now hopes to exploit this brand image to build more commercial space not only for its own use but also to let out space for rent.
Its rental income of Rs 115 crore a year is set to grow.
Officials told Business Line that LIC would develop about 40,000 sq ft of commercial area available behind the LIC building on Anna Salai in Chennai.
It will target information technology companies, which are among the high payers in rent, according to officials.
Officials addressing an inaugural function of a building here on Tuesday referred to LIC's land holding and the potential they offered.
To them the real estate is a tangible representation of the value that LIC holds for its policyholders, they said.
According to Mr B. Venugopal, Regional Manager (Estates and Office Services), LIC, it will develop over two lakh sq ft of commercial space in Chennai over the next few years.
At present, it has rented out over one lakh sq ft and its revenue from real estate is around Rs 3 crore in Chennai. Even at a conservative estimate of Rs 10 a sq ft, the proposed construction would net LIC additional revenue of more than Rs 2 crore a year.
The south zone, which includes Tamil Nadu, Kerala and Pondicherry, gives it revenues of Rs 5 crore a year in rental income. This zone is targeting a four-fold increase in revenue from real estates over the next two - three years, a large part of which is going to come from Chennai, particularly the arterial Anna Salai.
The largest contributor in terms of rent revenue is Delhi where the revenue is around Rs 40 crore a year.
To maximise revenues from the buildings that LIC owns, the old buildings are being cleared and new constructions are coming up, he said. It has inherited buildings from erstwhile private insurance companies, which were nationalised and merged to form the LIC.
For instance, he pointed out that the new building being inaugurated would recoup its expenditure of over Rs 2 crore in less than four years.
Located on a 24,000 sq ft property most of the area, except for a portion retained for its own use, was rented out.