What A Shame!~LIC bails out Government with US $ 1.2 b in IOC Disinvestment

Just a few days ago I had blogged that the IOC Disnvestment on Monday will be just a formality….But Monday’s Global Stocks Chinese Contagion Capitulation saw a very very poor response to the IOC  Disinvestment

It’s a real shame that the Government yet again  had to direct/order LIC to bail it out yet again…it would have been a wise idea to defer the issue rather than order LIC to invest in 86% of  Issue of Rs 9379 crs  bat Floor Price of Rs 387 !…. shoots up  LIC holding in IOC by a whopping 8.59% from 2.52% to 11.11%….it’s another issue that IOC is past Rs 400 today on signing a refinery deal with Nepal

This then sadly was not a real disnvestment just as it was not for a similar 10% last year too when Oil India & ONGC were ordered to pick up 5% each at Rs 220 .,,,just another continuing story of government selling from one PSU to another !

Its no wonder LIC does not want to go public ! and neither is the Government inclined to make it public !

Raises Huge Corporate Governance Issues on Investment Decision Making,Accountability and Tranparency

It’s happening for decades now….UTI was first the Big Market Daddy in the 1970’s to 1990’s before India opened out to FIIs and Other Mutual Funds that saw UTI losing it’s war of words with SEBI to be brought under it’s regulations….in the late 1980’s the UTI Chairman then had opened out to me in a candid interview on UTI’s Investment & Disinvestment Decisions Process,sometimes buying a company’s shares through one broker and selling the same company’s share on the same day through another !, and Competition emerging from other Mutual Funds sponsored by PSU Banks that were allowed to be set up .It was to be carried in a leading Magazine…it was explosive and so I send him the transcript to confirm he was not being misquoted….Phew! he panicked and  asked me not to carry the Interview….had told him it would be the Editor’s call….it was not carried finally !

LIC  yet stays out of SEBI regulation though its the Biggest Shareholder in Indian Equities and functions like a Government Proxy

Who’s to Question LIC !…or for that matter the Government ?…and the Disinvestment Secretary boasts of how with this Disinvestment it’s a been the best first half of the year in the last many years for Disinvestment Proceeds !

It’s the Cash Cow for the Government to lead and order the flow wherever it conveniently wants Investments !

I’m not saying LIC has made a losing decision to invest a huge over Rs 8000 crs or US $ 1.2 Billion just now in IOC….the point is not this…the point is whether it would have made this decision unless forced to by the Government to bail it out again !…it’s done this earlier …..check how in 2010 and 2012 it did this for ONGC when I blogged on it !

Saturday, March 3rd, 2012
In Both Substance & Form selling Shares from one Government Owned Company to another is not Disinvestment in the true sense !
You know it ! I know it! Involved Companies know it !…. and the Government knows it !….Yet the Charade goes on !
Mind you Disinvestment is quite different from Privatisation !…You think Government will let it’s holdings drop below 51% or lose control in their Navratnas & Mini Navratnas !…so in essence Disinvestment is simply letting go of direct Government Holding through the President of India up to a level…what happens when that level is reached…you cannot or rather do not want to  go below 51%….In IOC the President holds now 58.57 %
…and tell me is not there a shareholding % cap/ restriction in force for different shareholder groups like FPIs etc  to invest in a listed entity !…Oh ! not for LIC I suppose !

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