Long-term call, not govt nudge behind 4.5% CIL buy, says LIC

LIC, the country's largest institutional investor, says it added 4.51 per cent in the OFS based on a billion-tonne output outlook and long-term view

The country's largest institutional investor Life Insurance Corporation (LIC) of India on Tuesday said it did not receive any directive from the government to buy shares of Coal India in the offer for sale (OFS) last week.

In its first official comments on the investment, the insurance behemoth added it bought a big chunk of the shares in the OFS with a long-term view based on internal research that took into account factors such as the state-owned miner's 'billion-tonne' output target and its dividend track record.

Answering queries mailed by Business Standard last week, an LIC spokesperson said, "We have not received any directive from the government to increase its holding in Coal India." Adding, "The expected increase gross output target of one billion tonnes of coal by 2019-20, which is around double the current production is a major positive outlook. The company is a major dividend paying company, cash rich, debt free and the demand outlook for coal is also positive."

When asked whether it is bothered by the various issues raised by UK-based Hedge Fund TCI about the miner's pricing policies and governance issues, the spokesperson said, "We are not aware of the investment perspective of TCI. Our views on the company are long-term and the decision on investment is taken after internal independent analysis and research in companies before investment and if we find value in stocks, we participate in such offers."

TCI had objected to the government interference in pricing policies of Coal India. In early 2012, the government had forced Coal India to reverse its decision to hike coal prices. TCI first threatened to sue and then moved court against Coal India and its board of directors for corporate governance lapses and anti-minority investor policies. According to recent reports, TCI has sold off its stake in Coal India and has withdrawn the cases.

To a question if the issues raised by TCI have been addressed, the LIC spokesperson said, "We have no comment on the decision taken by other investors." LIC said it bought 4.51 per cent of Coal India shares in the recent sale where the central government raised Rs 22,557 crore by selling a 10 per cent stake.