So much is the value of its
non-financial holdings gains that LIC has formed a panel to evaluate its value
by SHILPY SINHA, MUMBAI
Life Insurance Corporation of
India (LIC of India) evokes a sense of security for millions of investors.
For some, its recent
investment decisions will help it generate sufficient returns to pay for their
retirement, or ensure a decent lifestyle after their death. There is some
consolation, at least for now.
Beyond its bonds & stocks the state-run insurer is sitting on a
treasure its collection of paintings, antique pieces & real estate estimated internally at more than
Rs. 70,000 crore, can be a comforting factor.
Antique pieces
and Paintings..!.
So, much is the value of its
non-financial holdings gains that the insurer has formed a committee to
evaluate the value of its antique pieces and paintings.
In fact, the late Mr. MF
Hussain, known as the Pablo Picasso of India, whose paintings welcome visitors
at the insurers head quarter, wanted to buyback the painting.
Probably, that was the time
that LIC realised what it was sitting on. Other than mr. Hussain, it also
possesses works of Mr. K. K Hebbar, a
celebrated artist who produced works with India as the theme for most of his
works.
Real estate
Long-term Investment..!
An institution such as LIC
holds properties for long term and it has been a good strategy, as real estate
as an asset class is a long-term investment, said Mr. Neeraj Bansal, Partner
Real Estate & Construction, KPMG.
LIC, in accordance with its
internal investment guidelines, needs to regularly monitor its investments,
periodically re-look at its investment strategies and re-evaluate its
individual investments.
They need to monetise their
property at an appropriate time to meet requirements. None in LIC wanted to
speak on record about the paintings &
antique pieces because they are just not sure about their worth.
An informal assessment from
outside experts makes them believe their value could vary from Rs. 100 crore to
Rs. 1,000 crore.
These paintings were made in
1963 and were bought by LIC for a few
lakhs, said an executive, who did not want to be identified. But, on the value
of real estate, where the valuation exercise was done a few years ago, an
official from its estate department is confident that it is about Rs. 70,000
crore.
But, he did not want to be identified. LIC, which
manages assets worth Rs. 13 lakh crore, has properties in hundreds of cities
& towns.
In fact, the probability of a
building one walks into in Mumbais Fort area belonging to LIC is quite high.
The hundreds of offices from which it operates, thousands of apartments & the
rental yield from office space could probably make it one of the richest Real
Estate Investment Trust, if converted into one.
A proof of the gold mine it
is si ting on is reflected in the rentals it collected in 2011-12 Rs. 218 crore, more than the net profit of
some private sector rival insurance companies.
Real assets may not be a
fanciful investment for a financial services company, that too for a state-run
one when the government is borrowing heavily. But, as many,including Hindustan
Unilever, are finding out now, real estate investments could bring in huge
gains.
Sale of real estate
properties & residential apartments
alone earned the soaps and shampoos maker above Rs.. 672 crore in profits in
the past 4 quarters. Thats almost double the profit of one of its key business
segments, beverages and foods, which houses brands such as Knorr soups, Lipton
tea and Bru coffee.
Real estate investments may
not be all that bad.
Src: Timesgroup
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