LIC, i.e., Life Insurance Corporation of India, is the country’s largest insurance company, and we all know that it sells insurance policies. Now the news is coming that LIC is planning to sell its properties in prime locations.
Let us know why LIC needs to sell property, what kind of property will be sold, and how much money LIC can earn by selling property.
LIC can sell its expensive properties, which are present in many big cities and include plots and commercial buildings. The company plans to raise 6 to 7 billion dollars, i.e., 50 to 60 thousand crore rupees, by selling properties.
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What Kind of Property will be Sold
This has been said in a report published in Mint. According to the report, the task of preparing a plan to sell real estate assets has been assigned to an internal team. The sale of property can start in Mumbai.
Along with being the largest insurance company, LIC is also the third largest landowner in the country. LIC has land and commercial buildings at prime locations in many big cities. These include the Jeevan Bharti Building in Connaught Place, Delhi, and the building in Kolkata. These include the LIC Building on Chittaranjan Avenue, the Asiatic Society, and Akbarali in Mumbai.
how much money LIC can earn by selling property
The report said that in the final valuation, the value of LIC’s real estate assets was estimated at Rs 50 to 60 thousand crores, while the actual value could be about five times this. A fresh valuation can be done to sell the property.
Why LIC needs to sell property?
LIC’s net profit in the financial year 2023–24 was Rs 40,676 crore, which was Rs 36,397 crore in the financial year 2022–23. LIC has announced a dividend of Rs 6 to its shareholders for the financial year 2024. If LIC’s plan to sell the property succeeds, then the company’s profit may increase, and shareholders can get a better dividend.
The report quoted sources as saying that the company may face problems in the valuation of the asset in view of this. LIC can create several separate units to hold real estate and manage monetization.
What are the challenges to selling property?
LIC may be planning to sell expensive buildings and land, but there are many hurdles in the way. The report says that the correct price of the asset can be known only through auction, but for this, amendments in the LIC Act and changes in the laws will be required.
Secondly, many properties of LIC are stuck in litigation. In such a situation, to implement the monetization plan, the government will have to speed up the legal resolution process.
Earlier, plans were also made to sell LIC properties, but due to legal disputes, they could not move forward.
This plan to sell land has come at a time when LIC is facing difficulties saving its market share in the insurance business. It is facing tough competition from private insurance companies. LIC has assets worth more than Rs 51 lakh crore.