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Business News/ Companies / News/  'Needed to fill gaps in internal systems...': Nirmala Sitharaman explains how LIC was prepared for IPO
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'Needed to fill gaps in internal systems...': Nirmala Sitharaman explains how LIC was prepared for IPO

Finance Minister Nirmala Sitharaman admits lack of internal professionalism in public sector undertakings in the 90s, speaks on efforts to fill gaps in LIC's internal systems before its IPO launch.

FM Sitharaman reportedly admitted that public sector undertakings lacked professionalism in the 90s.Premium
FM Sitharaman reportedly admitted that public sector undertakings lacked professionalism in the 90s.

Admitting the lack of professionalism in the functioning of public sector undertakings in the '90s, Finance Minister Nirmala Sitharaman said that she worked hard to fill gaps in the internal systems of Life Insurance Corporation (LIC) before the launch of its initial public offering (IPO), reported NDTV. 

"Needed to fill gaps in internal systems of LIC before IPO," FM Sitharaman told NDTV in an interview. She said that the public sector undertakings had been trying to bring in internal professionalism since 1991, but there was not much market orientation.

Also Read: IRS officer suspended for criticising Nirmala Sitharaman: Report

"I worked hard to fill the gaps. Public undertakings since 91 are trying to bring in internal professionalism, but there was not much market orientation," NDTV quoted Sitharaman as saying.

The country's largest insurer was listed in May 2022. The central government had sold over 22.13 crore shares of LIC, equal to 3.5% of its stake, through the IPO. At present, the government owns around 96.5% stake in the country's largest insurer. Post-listing, the company failed to perform well in the stock market. 

A year after the LIC IPO launch, experts considered it to be a wealth destructor mainly because it failed to capture the market against its private competitors. At a time when private players have expanded their businesses by directing the bulk of their efforts through banks, LIC continued to rely heavily on its agent mechanism with very poor conversion and earnings potential.

However, its shares witnessed a significant upswing in November last year. Over the last one month, the company shares have improved by 12.64%. Its share value has increased by 10.05% YTD and by 57.65% in the last year. LIC stock closed marginally higher at 944.65 per share on BSE on Friday. It touched its 52-week high of 971.80 per share on BSE on January 31. 

The surge in LIC share value is expected to be the result of buzz around its new non-par product, ‘Jeevan Utsav,’ translating to the “celebration of life."

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Published: 02 Feb 2024, 04:21 PM IST
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