JAMMU, Feb 15: LIC employees across Jammu, Kashmir and Leh held massive demonstrations against LIC IPO under the banner of joint front of unions in LIC including Class-1 Officers Federation, National Federation of Insurance Field Workers of India (NFIFWI) and Northern Zone Insurance Employees’ Association Srinagar Division (NZIEA).
Speaking on the occasion, Rajinder Kumar- vice president Class-1 Federation said that the Government filed the Draft Red Herring Prospectus with the capital markets regulator Securities Exchange Board of India (SEBI) yesterday in the evening for the IPO of LIC. The filing of documents on a Sunday after securing approval from a hurriedly convened Board meeting of LIC shows the desperation of Government to raise the resources to meet fiscal deficit target for the current financial year. With this move, the government moves closer to the listing of the LIC in the stock exchange. Usually it takes 75 days for the SEBI to scrutinise the papers and accord its approval for any IPO, but the Government has asked the SEBI to fast track the approval process in less than three weeks.
Pawan Gupta- Divisional secretary NZIEA said that in the DRHP filed with the SEBI, LIC has said that the Government will offload 316.25 million shares of face value Rs10 each of its over 6,325 million shares, constituting 5% of its stake in the LIC. The DRHP also makes it clear that the IPO is 100 per cent OFS (Offer for Sale) by the Government and no fresh issue of shares by LIC. Since the offer is an OFS, LIC will not receive any proceeds from the public issue. It is clear that the proceeds will go to the Government for meeting its disinvestment target. Actuarial firm Miliman Advisors LLP has estimated LIC’s Embedded Value (sum of the net asset value and present value of future profits) at Rs 5,39,686 crore as of September 30, 2021. However, a closer scrutiny of the Embedded Value Report clearly suggests that the Government has privileged the prospective shareholders over the present and future policyholders.
This is done by changing the surplus distribution pattern. The share of surplus distribution to the policyholders gets reduced from 95% to 90% to the participating policyholders and the entire 100% surplus from the non-participating policies, which is in much more focus of the Management, will be appropriated by the shareholders. This is unjust to the policyholders who have financed the growth of this great institution. The DRHP has not revealed the issue of size of the IPO.
At Srinagar, the demonstration was led by Imitiaz Ahmad Kar-convener Class-1 Federation, Ajaz Dar, joint secretary NZIEA Srinagar Division, Fyaz Gul, vice president and Syed Aadil Imam.