Thursday, 7 April 2016

LIC to auction Unitech’s land in Noida to recover Rs184 crore

New Delhi: Insurance major LIC will next month auction Unitech’s 14 lakh sq meter plot of land in Noida if the real estate company does not repay the entire dues of Rs.184 crore before that date.
Unitech had borrowed money from LIC by mortgaging the plot but with the real estate company defaulting on repayments, Life Insurance Corporation of India (LIC) issued an e-auction notice for sale of the plot on 6 May at a reserve price ofRs.2,660.56 crore.
When contacted, a Unitech spokesperson said the company would repay the outstanding amount to LIC soon.
“We are in the process of making the payment for outstanding shortly. We are close to finalising the funding for the same,” the spokesperson said.
People familiar with the matter said Unitech has recently raised Rs.85 crore from Piramal Group and is in talks with two private equity players to raise more funds for the development of this land parcel in Noida and to repay the LIC loan.
The notice for “public sale of immovable property mortgaged to the corporation under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002” was issued on Tuesday.
In the notice, LIC said that the outstanding dues for recovery of which property are being sold is Rs184.12 crore as on 31 March 2016 plus interest from 1 April 2016 and other costs, charges and incidental expenses.
The property consisting of land measuring 14,07,327.68 square meter is located in Noida, Uttar Pradesh. This land is on lease of 90 years from Noida Authority by a lease deed executed on 28 December 2006 in favour of Unitech Hi-Tech Developers Ltd.
“This is also a notice to the above named borrower/ mortgagor (Unitech and Unitech Hi-Tech Developers) about holding of e-auction sale on the above mentioned date if the dues are not repaid in full before the date of e-auction,” the notice said.
LIC said that it would be the responsibility of the interested bidders to inspect and satisfy themselves about the property before submission of the bid.
Unitech’s consolidated net debt as of 31 December 2015 stood at Rs.6,802.05 crore.
Net debt to equity ratio was 0.64. The company’s share price closed at Rs.5.04 apiece on the BSE, up 1.82%.


Wednesday, 6 April 2016

LIC may sue Essar Power for missing interest payments on 11-year bonds

MUMBAI: Life Insurance Corporation of India may sue the Ruia-run Essar Power for missing interest payments on 11-year bonds it sold in 2013 to raise Rs 1,000 crore, said two people aware of the matter. But the company said it would soon be able to catch up on payments.
Essar Power has not paid interest in the past six months on the papers. The country's largest insurer may move court to recover its dues by forcing Essar Power to sell some assets, said the people cited above.
However, improved fuel supply has allowed the utility to restart power plants, putting it on the path to recovery, it said in an emailed release. Apart from that, some of its own dues are liable to be paid soon.
"More than Rs 1,000 crore in receivables from GUVNL (Gujarat Urja Vikas Nigam Ltd) is stuck in court cases where lower courts have ruled in our favour," it said. "We expect matters to be finalised shortly. Recovery from these cases will be used to pay debt of the holding company, Essar Power Ltd, including that owed to LIC."
LIC had bought the bonds that offered an attractive coupon rate of 12.5%, when yield on highly rated paper was coming off.
Essar Power is among infrastructure companies that haven't been able to keep up with payments as projects got stalled over delays in approvals and other reasons. Some power units were mothballed Others borrowed excessively, leading to defaults. Banks are now being forced by the Reserve Bank of India to clean up their books and are in turn forcing Lanco, Jaypee Group and others to sell assets to get their money back. The drop in fuel prices has been good news for Essar Power.
"Most of these issues are getting resolved since gas prices have fallen sharply, helping us to restart our gas-based projects,'' the company said. "Our imported coal-based project has improved performance significantly because of better operational efficiency and falling coal prices. We are also restarting our domestic coal-based plant shortly because of increased availability of domestic coal. Overall, the power scenario is improving with regulatory certainty now in place."
This marks a turnaround from its previous straits. "Its operational gas-based projects were not operating because of high gas prices and the power sector in general was stressed," the company said. "All these factors led to a delay in servicing debenture holders." Essar Power said that it has repaid a significant amount of debt, primarily taken for the development of electricity generation projects, and is planning to bring this down to zero in the next two years.

Tuesday, 5 April 2016

LIC rides to the rescue of public sector banks

The Life Insurance Corp. of India (LIC) has been helping the government pump in money into capital-starved public sector banks. It has been increasing its stake in public sector banks for the past few years, as you can see from the chart compiled by Kotak Institutional Equities Research. The latest addition came on 31 March when IDBI Bank sold its 2% stake with the National Stock Exchange to LIC for around Rs.351 crore, a part of the turnaround plan for the bank.
In fiscal year 2016, LIC has infused a total of Rs.2,539 crore in public sector banks Allahabad Bank, Andhra Bank, Bank of India, Central Bank, Corporation Bank, Dena Bank, IDBI Bank, Indian Overseas Bank, Oriental Bank of Commerce, Syndicate Bank and Vijaya Bank. This after LIC infused a total of Rs.1,850 crore in 2015 and Rs.366 crore in 2014 in the PSBs. These capital infusions aid the government in its efforts to infuse badly needed capital into publicly-owned banks.
Given its fiscal constraints, the government has decided to infuse Rs.25,000 crore in FY17 after infusing a similar amount in FY16 in select PSBs. But these amounts are not enough, especially because massive bad loans have severely eroded several banks’ net worth. Therefore, LIC has ridden to the rescue, increasing its stake in at least half of the capital starved small and medium sized PSBs in the past 16 months.
Clearly, “the small and mid-sized PSBs need capital badly due to low capital adequacy ratio. The smaller PSBs can’t go to the market and raise money through tier 1 bonds or do private placement because of cheap valuations and ratings downgrade. Hence LIC is bailing them out,” said Siddhartha Purohit, senior research analyst from Angel Broking.
Apart from funding public sector banks, the Kotak note also points out that a third of the government’s divestment receipts has come from LIC since FY12. It adds, “LIC has also been roped in by the Indian Railways, another arm of the Government of India, to subscribe to Rs.1.5 trillion of its bonds over the next five years. Such internal transfers between ‘government entities’ do not provide the checks and balances that a market fund-raising does.”


Sunday, 3 April 2016

LIC expands globally to begin Bangladesh operations soon

In line with its international expansion strategy, Life Insurance Corporation of India (LIC) will begin operations in Bangladesh soon. Sources said its joint venture company, Life Insurance Corporation (LIC) of Bangladesh Limited is incorporated in mid-December 2015 and business operations will start shortly.

LIC, through its branches/joint venture companies/wholly-owned subsidiary, is present in 14 countries including places like Singapore, Kenya, Sri Lanka, Nepal and Bahrain among others.

Business growth in the overseas markets has also seen positive results in the past years. First Year Premiums and Total Premium Income from LIC's global operations, as a whole, was Rs 1479.13 crore and Rs 2403.74 crore in 2014-15, which has been growing at 39 per cent and 30 per cent over the previous five financial years.

With respect to opening up operations in other countries said that they will take a a call on further expansion at an opportune time. As per LIC's Annual Report for 2014-15, the foreign branches put together issued 11,176 policies with first premium Income of Rs 122.85 crore.

Among the foreign joint venture companies, LIC (International) B.S.C. (c), Bahrain was established in Bahrain as a joint venture company which commenced its operations on 23.07.1989 catering to the life insurance needs of Non-Resident Indians (NRIs) and local population in the Gulf by issuing life insurance policies in US Dollars. The company operates in 5 GCC countries of Bahrain, Kuwait, UAE (Dubai & Abu Dhabi), Qatar and Oman.

Similarly, LIC (Nepal) Ltd., a joint venture company between LIC of India and Vishal Group of Companies with holding of public of Nepal was established in December 2001. It is a listed company whose shares are traded on the Nepal Stock Exchange.

The Corporation directly operates through its branch offices in Mauritius (Port Louis), Fiji (Suva & Lautoka) and United Kingdom (Wembley).