LIC could be decisive factor

The largest domestic investor, Life Insurance Corporation of India could turn out to the deciding factor for the success of Ambuja Cement India Ltd's (ACIL) 20 per cent open offer for Associated Cement Company (ACC).

LIC today said that its holding in ACC was for long term appreciation and was not for short term gains. The offer was made at Rs 370 per share while it was quoting at Rs 341 today at the bourses.

Officials in LIC said that the pricing of the offer would have to meet the Corporations expectations on return from the scrip. LIC - the single largest shareholder in ACC holds as much as 15.7 per cent in the company.

Total holding of insurance companies in ACC stands at 18.63 as of December 2003.

Oriental Insurance holds close to 1.18 per cent while New India holds another 1.73 per cent. Sources form the insurance sector said other insurance companies general follow its counterpart LIC while making such decisions and in most cases they take a joint decision.

K Sridhar, Managing Director, LIC in charge of investment said, "We would consider the return on investment that we have made in ACC which would be the prime deciding factor on whether to participate or not in the open offer. We are however yet to receive the offer officially and would take a final decision as and when we receive the offer."

LIC's holding in ACC was also higher than ACIL's holding which stands at 13.8 per cent.

While the total holding of banks and financial institutions in the cement company as of December 20003 stands at 21.75 per cent while total FII holding in the company stands at 23.27 per cent.