Radhika Menon

Mumbai, Oct. 20

LIFE Insurance Corporation of India has set its sights on developing its real estate portfolio, targeting a growth of 40 per cent in its net income.

Mr K. Sridhar, Managing Director, LIC, said with around 70 per cent of LIC's properties coming from the commercial segment, the income from real estate has been growing. The gross income from real estate for 2004-05 was Rs 130 crore and the net income, excluding expenses, was Rs 90 crore. This, however, accounts for just three per cent of LIC's total income.

"The target for this year is a growth of 25 per cent in the gross income and 40 per cent rise in the net income," said Mr Sridhar.

Asset creation was a core area for insurance companies worldwide and LIC was no exception to this, he said. The company has 1,577 properties, of which, eight are in countries outside India such as Mauritus and Fiji.

"We have been in the industry for about 50 years and the book value of our assets stands at Rs 1,139 crore," Mr Sridhar said.

The Insurance Regulatory and Development Authority of India has in fact asked insurance companies to assess the market value of their assets. "To calculate the market value, the rates are different. The market value of our real estate assets is around Rs 3,000 crore," said Mr Sridhar.

Taking steps in this direction, the company has introduced `growth in income from real estate' as one of the parameters for the annual productivity linked lump sum.

The company hopes that such an initiative would push employees to work towards increasing rental income and resolving cases involved in litigation.

The company plans to develop 72 of its properties worth Rs 1,000 crore into commercial and residential complexes. "We own these plots and are working on developing them. Of the 72 properties, five are involved in litigation," he said.

Housing projects of policyholders are high on the agenda with work in progress in Visakhapatnam, Kolkata, Kharagpur, Pune and Ahmedabad.

Mr Sridhar says: "We hope to create heritage buildings like the Metropolitan building in Kolkata and the LIC buildings in Chennai and Delhi. It is a matter of prestige for us".

(This article was published in the Business Line print edition dated October 21, 2005)
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