LIC headquarters in Mumbai
File image of the Life Insurance Corporation of India headquarters in Mumbai | Photo: licindia.in
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New Delhi: The Life Insurance Corporation of India has often ended up being the lender of last resort to the government.

But some high-profile and large investments made by LIC in the stocks of state-run companies in recent years have eroded in value, even though stock markets overall have grown during this period, an analysis by ThePrint has found.

LIC’s investment in initial public offerings (IPOs) of state-run firms or in share sales of listed PSUs, some accounting for around 50 per cent of the funds raised by the government through these issues, have seen their value halve, analysis of data from stock exchanges shows.

Besides, LIC increasing its stake in IDBI to 51 per cent has not proven to be a prudent buy as the bank has been bleeding due to heavy losses.

LIC, with total assets of more than Rs 31 lakh crore, is the country’s largest life insurer. It has not only bailed the government out through investments in state-owned firms and public sector banks, it has also lent a helping hand to fund-starved sectors like railways, road and power over the last few years.

Data released from the RBI shows that the share of public investments in LIC’s total investment increased to 85 per cent as of March 2019 from 79 per cent as of March 2014.


Also read: LIC put Rs 10.7 lakh cr in PSUs under Modi, almost same as investments in 6 decades to 2014


How each investment has fared

LIC picked up more than 50 per cent of shares offered in the IPOs of state-owned general insurer New India Assurance Company in November 2017. LIC made a total investment of Rs 5,713 crore at an issue price of Rs 800 at the time.

Graphic: Arindam Mukherjee | ThePrint
Graphic: Arindam Mukherjee | ThePrint

However, the value of LIC’s holdings had fallen to Rs 757 crore, down 86 per cent, after the share price fell to Rs 106.85 (23 September 2019).

It’s a similar story for another general insurer, General Insurance Corporation. LIC invested Rs 5,641 crore in GIC in October 2017, but the value of its investments has nearly halved to Rs 2,979 crore at present.

LIC’s investments in three other public-sector IPOs haven’t done well either. It invested Rs 2,843 crore in Hindustan Aeronautics Ltd in March 2018, but the value of its investments has fallen 38 per cent to Rs 1,751 crore. Its relatively smaller investments in MSTC (formerly Metal Scrap Trading Corporation) and Bharat Dynamics are also trading in the red.

Another example is the acquisition of the loss-making state-run IDBI Bank. LIC invested Rs 21,624 crore in the bank to increase its stake to 51 per cent from 8 per cent in September-December 2018. The value of its equity holdings is now Rs 10,967 crore, a fall of 47 per cent in less than a year, after the bank, now classified as a private sector lender, raked up losses amounting to Rs 8,718 crore in just two quarters.

LIC also picked up more than 40 per cent of the shares offered by the government in NTPC in August 2017. It invested around Rs 4,275 crore, but the value of that investment has come down by 30 per cent in the last two years to Rs 3,003 crore.

All in all, LIC has seen the value of its holdings erode by more than Rs 20,000 crore in just five major stocks in roughly two years.

Only two of LIC’s IPO investments in the last two years in state-owned firms are in the green. The IPO investments in Mishra Dhatu Nigam and GRSE (Garden Reach Shipbuilders & Engineers), totalling Rs 246 crore, have not made losses, but the gains are only Rs 50 crore.

LIC did not respond to an email seeking comments until the time of publishing this report.


Also read: Is Modi govt being reasonable or reckless in using LIC to back its ailing public sector?


 

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50 Comments Share Your Views

50 COMMENTS

  1. You said the investment in public sector increased from 79% to 84% in 2014. Kindly also tell us when was that investment of 79% made, and how is that faring. Only then a balanced view can be taken, else your article will get classified as half truth and biased.

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  3. It is undue interference by govt of india in LIC investments. The funds belong to general public. Policy holders money be managed carefully.

  4. Lic is cornucopia firm n sometime back lic said that they have 15000cr in their balance sheet n that money is not related to anyone ..so may be lic now utilise that money and recover the losses that lic suffered from but v can’t blame the government .

  5. Though the blind Modi bhakts will not be able to see reality and will save theirs and Modi’s failure in certain things by easily passing all the buck on previous Govt. How long will they run from reality.

  6. The above is the KANNADA translation of this message👇👇👇

    There is a *reporting in press that LIC has lost* nearly Rs.57000 crores, *which is absolutely fake, false, misleading and disingenuous. We strongly condemn such information.* When due to slow down in the economy, we are witnessing Job losses in the entire country, *LIC is the only institution which is recruiting. LIC this year, had already recruited 800 AAO’s, and given notification for recruitment of 8500 D.O’s and 8000 Assistants.*

    *LIC has increased its market share till August 2019 and this may be the reason for the fake news being circulated to stall our growth and instill fear in the minds of field force and the policy holders.* For the information of the members, LIC Investments are very safe and as per the guidelines of IRDA and LIC Act. *The investments made by LIC (nearly 68%) in Infrastructure, Bonds, Securities, Loans to State Governments etc. are having sovereign guarantee* i.e is guaranteed by the Government of India. As regards the investment made in the equity markets, *LIC has made profits every year and there is no exaggeration to tell that there is no F.Y in which LIC has not made profits. LIC has made a net profit of Rs.23621 Crores during the year 2018-19 and during the current financial year LIC already made a profit of Rs.11000 Crores and may cross Rs.30000 Crores by the end of F.Y.* LIC is not a short time investor in the equities and follows the principle of contrarian investing, which is the correct type of investing and even followed by the world famous investor, Warren Buffett. Contrarian investing is an investment strategy by purchasing and selling in contrast to the prevailing market sentiment of the time. LIC buys stocks at low price, when the share market falls and sells them when the market is high and the shares start performing well. Kindly bring this to the notice of all your agents and policy holders.

  7. Modi has misled people saying that previous govts did nothing. Andh bhakths are repeating same lies. If previous govts did nothing, from where did companies like LIC, SBI, HAL, GAIL, IOC, BHEL, BEL, or ISRO come? Of course, some like BSNL and Air India have been mismanaged due to overstaffing and high salaries. But current govt too has continued to increase salaries or DA every year. So, mismanagement continues.

  8. LIC invested RS 246 Crore in MiDhaNi and GRSE and made a profit of Rs 50 Crore. That is 20.32% return. Assuming this was done over 2 years ago, at 10% it is still quite good. Why is The Print complaining?

  9. By the reckless decision taken by current regime LIC investment in other PSUs are making losses. I am not a big fan of Chidambaram and decisions taken by him but by that analogy current government is also gaining moolah through his industrial coterie friends by indirect investment in other Psu. No FDI and FIIs are investing due to poor management of economy by this govt. May be next government who will come to power order an enquiry then everything will be crystal clear.

  10. For the sake of survival in the print media and to be a mouth piece of the opposition the article has been made out drying the present government which is trying it’s best to bring back the country from the shoddy dealings done by the earlier regime which was in power for 6 decades and which was looting spree. I want to ask what is LIC it is also a government entity.
    The article seems to project as if nothing g was happened earlier and creates an issue that everything is happening during the present regime.
    It clearly gives the impression that your media has a vested interest in tarnishing the present government.
    Further some one has clearly mentioned in his comment that all navarathna PSU”s like banking,aviation and other including defence priduct manufacturing organisations were scot free and were suckling the blood of taxpayer’s money with quality in their work and no accountability.
    Now this “Aaya ram Gaya ram” and ” Chatham hai” tradition prevailing in these PSU’s are over.
    The tax payer has every right to question these entities for their work done.
    So to be in print media be honest and do not try to be a mouth piece of goons.

    • I beg to differ sir.
      LIC has been mismanaged by the previous governments. LIC is still being mismanaged by the current government. Questions must be raised- otherwise the government will keep milking the PSU for its own short term goals (wherein it is supposed to look after the interests of the general public and the insured)

  11. LIC is still strong in spite of private players beause of faith of insurers having with it. We do not know how long this will hold. Going is giving some negative signals which LIC should avoid. I am sleeping well under the impression that my nominee will be taken care of. Don’t hurt that believe.

  12. This is a one sided fake and half story.
    Have you study the entire investment of LIC fund,and profit from the investment.
    No, Please study it,then write the correct story.

  13. It is useless for the common people to put money in LIC. At the end they pay you some pea nuts .They enjoy the hard earned money of common people in the name of insurance.

  14. Thr print is run by Gandhi family money so they r doing his duty to create negative environment. But Indian knows the truth.

  15. Author has to have some experience of stocks before writing anything about LIC and stocks. Market and economy is down now. But LIC will be in gain after sometime, the author will vanish from this planet. These authors just do propaganda to flee small investors. Is author having any chit fund scheme in his name, just verify. India is great economy.

  16. Policy of Lic towards its clients is very bad. Lot of poor people have invested in LIC but nothing goes in favour of customer LIC needs new guidelines to improve.

    • हम ने बचपन में नवदीप हालदार के कई सारे कॉमिक सुनने और पड़े भी थे। उसमे से एक प्रचलित किस्सा आज इस सरकार कर अवस्था को देक कर याद आ रहा है। वह किस्सा हैं:

      एक रात, एक घर का मालिक सो रहा था, तब एक व्यक्ति उस वक्त घर में खिड़की से अंधर घूस आया। तब मालिक ने उस व्यक्ति को घर में प्रवेश करते देख लिया था लेकिन कुछ भी नहीं बोला, फिर उस व्यक्ति ने धीरे से तिझोरी खोला, फिर भी मालिक ने कुछ नहीं बोला, फिर उस व्यक्ति ने सारे आभूषण समेठ लिया फीर भी मालिक ने कुछ भी नहीं बोला, फिर वह व्यक्ति भाग गया तभी भी मालिक ने कुछ नहीं बोला। कुछ देर बाद मालिक चारपाई से उठ कर गाओ वालो को बुलाया की मेरे घर में चोरी हो गई है। पर अप्सोस जब तक समझ में आया तब तक बहू देर हो चुकी थी।

      इस में से कई सारे सवाल उत्पन्न होते है। जैसे कि:

      १) कहीं मालिक के साथ उस व्यक्ति का साठ- घाट थो नहीं था?

      २) क्या सच में मालिक को देर से समझ में आया कि उनके घर में चोरी हो गया?

      ३) जब मालिक के सामने चोरी हो रहा था तब क्या मालिक का सच में हिम्मत नहीं था कि वे उट कर इसका विरोध करे?

  17. It is blessing in disguise. LIC is fortunate to have invested in PSUs and PSE Enterprise. Most of the PSU ARE good money spinners but unfortunately they are poorly managed. Under present Govt. there is lot of pressure on the part of the management to perform. The auother reflect the opinion of PV. In all probability it seems it is a planted news. CROCODILE TEARS.

    • It seems u have hired all idiots. Investment is done by LIC and not Ministry. Even if u assume than confirm earlier investment made by cong finance minister who is now enjoying life in heaven

  18. what yes it’s global recession yes …but govt is not backing down .it’s so positive to govt is everyday taking steps in favour of poor every day new things for under prevledge people but How can blind person can see and feel happiness of poor peopl

  19. This article is useless and misleading.
    If you’re really tracking the markets can you tell me how many stocks have given positive returns in past two years. Why only blame these stock.

  20. I remember same thing happened to UTI and it was dissolved. However there were certain shares which were part of its assets were collected under a vehicle named SUUTI. You will be amazed to know that the value of these shares rose manifold times when SUUTI was encashed by Govt. Investment in stocks yields good returns after long period of time.
    Moreover, like banks if LIC need to be supported on future, Govt will do it as it has been doing for many other such institutions including UTI.

  21. Poor research done by Journalist here. For new India assurance, the price reduction is not 86%as there was a bonus issue in May 2018. Please don’t distort the facts and publish a revised article

    • You were waiting for a chance and you got it. I have advised BIFR companies on restructuring for past 15 yrs. It isn’t easy to be bankrupt. LIC is run by officers with proven track record. LIC also holds investments in Tata and Mahindra and other good firms as well.
      Some investments have yileded bad returns. My constructive criticism is that LIC should diversify portfolio even more. I am not impressed by it’s IDBI investments. That bank has a high NPA and needs an overhaul.
      Markets will go up again. So don’t worry about that.

  22. शेखर गुप्ता कब तक प्रोपोगेंडा चलाते रहोगे ? 2018 से स्टॉक मार्केट में सारे स्टॉक्स 20% से लेकर 80% तक टूटे है, कुछ लार्ज कैप स्टॉक को छोड़ दें तो। अब जब मार्किट का cycle चेंज होगा तो सब ऊपर आएंगे। ये मार्किट में होता रहता है। वैल्यूएशन डाउन है। lic की बात कर रहे हो, भारत का कोई एक फण्ड हाउस निकाल के दे दो जो पिछले डेढ़ साल में लॉस में ना हो। तो कृपया करके मोदी बिरोध में अपना एजेंडा ना चलाओ। जो लोग शेयर मार्केट को जानते है उन्हें सब पता है। ये सब प्रोपोगेंडा काम नही आनेवाला।

  23. Namo Government is grossly accountable for continuing losses in public sector and even in monopoly companies. Hindustan air on tics alone manufacturer Tejas but payment get too late. SAIL is basic industry for infra but the giant is sinking. All PS B are in red compared with HDFC, Kotak Mahindra, ICICI Bank etc.The fault lies with all purpose bureaucrats who hardly know the basics of economics.

  24. Horrible state of management by BJP govt to use RBI and LIC cash that these entities earned by frugal planning over decades! BJP is burning it up in a few years!
    Not to mention, asking state governments in India to do the same with state Treasury cash, cash that belongs to of, gratuity, retirement funds and accounts. Next decades, no government jobs, no gratuity, no pention, people will die poor while adanis and ambanis get government defence, Hal, isro contracts leading to more mission failures, cash crunch for States and PSUs. God save this country.

  25. There is ups and downs in stock market.So there is no need to worry for the stakeholders. Some media houses is negatively publishing so many reports against lic but they should have the guts to acknowledge that as per IRDA report LIC has rose it new business premium for the 1st quarter of this financial.year with approx 67% growth YOY basis and LiC is holding 74% Market in NOP also.So Trust Thy name is LIC.

  26. IDBI will recover and HAL might too as it has a captive market. The rest i have never heard of. It looks very bad for the moment but this shouldn’t be a big problem in the medium term.

  27. LIC is life line of citizen. More than thirty crores of people having faith with LIC. Decision makers to take more care in using pilicy holders fund. LIC IS AN IDENTITY OF FINANCIAL DISCIPLINE. But it seems such identity my erode if such decisions are imposed forcefully on this giant financial sector.

  28. LIC is the cash cow of the present govt. In the guise of disinvestment LIC is footing the bill as no pvt. Company would like to invest in these govt. companies as they are not profitable.

  29. These are valuation loss just like all investor. It occurs when market goes down and it goes up when market goes up. How you guys never mentioned about gains made by LIC or EPFO when market goes up. All you do is misleading and horrifying the situation and people and blaming govt.

  30. Lic has made 90k crore in other stocks .Its very usual in market to have ups and downs. This four may double in another 2 years who knows. This is like stopping to any low to create negativity

  31. Very unfortunate. All phone calls to financial institutions are bad, not just those meant to help a crony. On another plane, MUDRA will harm the banking sector.

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