With facing regulatory pressure and concerns about LIC’s exposure to the beleaguered gold jewellery firm, Chairman Rajesh Mehta has distanced himself from the insurer’s investment decisions, arguing that ordinary retail shareholders stand to gain regardless of how the situation plays out.
“LIC has not purchased the shares yesterday or last year. LIC’s purchases are over a period of time, approximately 20 years. These shares have been taken by LIC from the open market, from the stock market,” Mehta told PTI in an interview.
Currently, LIC holds a 10.80 per cent stake in Rajesh Exports.
Mehta was categorical that neither he nor other promoters had any role in LIC’s accumulation of the stock.
“No promoter has ever sold his shares to LIC. The company has never made any placement to LIC. By the buying of shares by LIC, the company or the promoters have never benefited in any manner,” he said.
Mehta said the company had no relationship with or knowledge of LIC’s investment decisions.
“We don’t even know where LIC’s office is. We have no contact, no connection. This decision of buying shares through the secondary market is their own decision in a prudent commercial manner.”
Despite the sharp erosion in Rajesh Exports’ share price, Mehta expressed confidence, based on his own assessment, that LIC had not yet slipped into the red on its position.
The stock of Rajesh Exports Ltd has tumbled over 14 per cent since June 3, and hit a new lower circuit limit of Rs 94.50 on Monday. “Even today, at these pathetic rates and lower rates also, according to my understanding, LIC has still not lost money. This accumulated price, I believe, I have not seen it. I believe this accumulated price still supports,” he said.
“Even if LIC has lost money, and this is the most important statement which I am giving for the first time, who is the counter-gainer? If somebody loses, somebody has to gain. Who is the counterpart who has gained? It is the common Indian public.”
“They have taken the shares from the common Indian public, who have benefited. What is wrong with that? Are the people who are speaking against this, against the benefit of the common Indian public?” he pointed out.
On whether a potential LIC exit could destabilise Rajesh Exports, Mehta was dismissive and once again said any sell-off is an opportunity for retail buyers.
“If they are able to sell, let them sell. Let the public buy back…. It is the public which has benefited in this, not the company or the promoter,” he said.
LIC, India’s largest institutional investor, has not commented on its position in Rajesh Exports or its future investment strategy with respect to the stock.