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LIC stocks up, to pour Rs 9000 cr into shares

Calcutta, June 21: Life Insurance Corporation of India (LIC) will buy shares worth Rs 9,000 crore this fiscal, up from Rs 7,000 crore in 2003-04, as part of a plan to step up the volume of funds it shovels into the equity market.

The public-sector insurance major has already pumped in Rs 3,000 crore in the first three months against Rs 500 crore in the year-ago period. One of its biggest purchases in recent times was on May 17, when the sensex plumbed 843 points in intra-day deals. It continued to buy till stability returned to the market.

Managing director R. N. Bhardwaj said, “We have set a surplus target of Rs 1 lakh crore for the current financial year. We will invest 9 per cent of this in the equity market, but at no time will we cross 10 per cent.”

The corporation is now studying the possibility of buying shares that are part of the B1 category on stock exchanges. Its total equity investment is Rs 23,000 crore, whose mark-to-market value is pegged at Rs 45,000 crore.

Fifteen per cent of its surplus funds will be parked in infrastructure projects, 50 per cent in government securities and state government bonds and 35 per cent in corporate debentures, commercial papers and shares.

LIC sees power as a major investment avenue. Bhardwaj said Rs 7,000 crore has already been lent to National Hydroelectric Power Corporation, Rs 5,000 crore to National Thermal Power Corporation and another Rs 1,000 crore to Rural Electrification Corporation.

The insurance giant has decided to set up four separate strategic business units (SBUs) for its other businesses — international operations, pension and group schemes, real estate and alternative business channels — in line with a Deloitte Haskins & Sells proposal.

“The special units will not be spun off into four different companies. They will enjoy functional autonomy, but will be within LIC’s fold,” Bhardwaj said.

At present, 1 per cent of LIC’s premium income flows from its international business. A separate SBU for international operations will help it take this figure to 5 per cent. An office in Mauritius is also planned.

LIC, targeting sales of 10 lakh policies and premium income of Rs 11,665 crore in 2004-05, will launch two unit-linked individual and group insurance products. An equal number will be wound up in this financial year, although Bhardwaj refused to name them.

UTI Bank stake

LIC is keen to increase its 14 per cent stake in UTI Bank. “We are open to increasing our stake. But since both companies are government-owned, the finance ministry has to take a decision,” Bhardwaj said.

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