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Even as leading doctors and executives of Tata Trusts in their personal capacity have filed a PIL (public interest litigation) petition against public sector insurance companies for their investments in tobacco stocks, the petitioners have omitted an important investor category of tobacco stocks: The mutual funds that own shares in tobacco companies.
One of the petitioners, Sumitra Hooda Pednekar, wife of the late Satish Pednekar, former minister of Maharashtra who died of oral cancer, has been vocal about the taxes that the government earns from tobacco industries, and also the profits that Life Insurance Corporation, financial institutions, and mutual funds have made from their investments in tobacco companies.
Statistics collated by this newspaper show mutual funds own shares of Rs 14,000 crore in tobacco companies, with Rs 13,500 crore in tobacco major ITC as of March 2017.
On Thursday, Pednekar and six others filed the petition in the Bombay High Court, seeking the court’s directions to public sector insurance firms to sell their holding in tobacco companies. The petition said while the government had committed itself to tackling the problem of tobacco and its harmful effects, the insurance companies, along with SUUTI (Specified Undertaking of Unit Trust of India), in complete disregard for the government’s policy, continue to invest in ITC.
Investments by insurance companies in the West are especially targeted because they not only sell health and life insurance but also slap higher premiums on smokers. Hence, critics say they profit from investing in tobacco companies and charging higher premium from smokers.
But over the years, some funds, especially retirement funds and insurance companies in the US, Canada, and Scandinavian countries, have sold their sin stocks, which fall in the tobacco, gambling, arms, and liquor segments, and casinos.
