State-owned insurance firms, including behemoth LIC, have made gains of thousands of crores of rupees with significant investments in cigarette maker ITC even as private insurers and mutual funds have turned ‘responsible’ by drastically cutting their exposure.
In the last quarter itself, all four state-run insurers in India recorded an appreciation of more than ₹15,000 crore in their collective ITC holding of over 21%, while the gains have been worth more than ₹20,000 crore for the entire fiscal 2016-17.
Besides, the government also owns a significant stake worth about ₹31,000 crore in ITC through SUUTI (Specified Undertaking of the Unit Trust of India). This is despite SUUTI selling a stake of nearly 2% in ITC recently for about ₹6,700 crore, following which its holding fell to 9.1% in the conglomerate.
However, it is Life Insurance Corporation of India which has a lion’s share of the stake in ITC at nearly 16.3% and is now worth over ₹55,000 crore.
In addition to LIC, state-run general insurers — Oriental Insurance Company, the New India Assurance Company and General Insurance Corp of India — also hold significant stakes in ITC, which are collectively worth about ₹17,000 crore.
Plea against govt.
This assumes significance in the wake of a public interest litigation filed in the Bombay High Court against what it calls the government’s contrarian policy on tobacco.
The petition has alleged that the substantial investments made by wholly-owned public sector undertakings in the tobacco industry is in contradiction to the anti-tobacco stance taken by the Government.
The company’s shareholding data shows that some private sector insurers including ICICI Prudential Life and several mutual funds have pared their stakes fully or substantially in the recent years.
ICICI Pru is no more listed as a shareholder, though it had a stake of over 1% (the threshold limit for disclosure as an investor) till FY13, while all mutual funds together now hold less than 4% stake in ITC, falling from the about 13% seen till FY15.
Top executives of several mutual funds and private sector insurers, on conditions of anonymity, said they had taken a conscious decision over the years to exit or at least pare investments in sectors like tobacco and liquor as part of a ‘responsible investment strategy’.
