‘There’s no pressure to buy any share’

DK Mehrotra, chairman of LIC, can’t understand why there is a buzz around poor returns the insurance giant made by bailing out governments. The insurer, he says, is not in the short-term game at all, and if its long-term purchases are put into the calculus, the gains would overwhelm losses, is his thesis. Excerpts from an interview:

How often do you get calls from the North Block to bail out public issues?
(Laughs) No, we don’t get that.

There’s no political or corporate pressure?
No, at least I have not experienced it. There is no pressure on me to buy any particular share. After the ONGC and  Hindustan Copper follow-ons, there was a lot of controversy. See, the thing is, if I find value in a particular investment, the scale at which I can operate no one else can. That’s the thing which catches attention, but that shouldn’t become a point of criticism and questioning. Even if I exit from ONGC today, I would have booked a profit. If I find a good opportunity and a good scrip, I will definitely pick it up.

So, it’s essentially a short-term view to say you made some losses…
Absolutely. We have been holding stocks bought 20-25 years back and we are getting good returns on them. We are not short-term players at all. We are a long-term investor and our relentless focus is that the customer gets a good return. We cannot simply risk his premium. So, sometimes we have been dubbed conservative and low-profile. That’s alright as long as I am not risking the client’s money. Secondly, we have a very strong research team. We keep on scanning various companies. I can tell you with full confidence that whatever investment decisions we take are purely commercial as a long-term player.

Do you think the stock market has enough liquidity for you to be a big seller?
See, it’s like this: if the market is bullish and prices go up, we get an opportunity to churn our trading portfolio. This year, too, we have booked good profits. When the market is bearish, we get the opportunity to pick up some really good shares. We go by this all the time. As long as I am finding some opportunity on either side of the spectrum, we are fine.

Have your ever reached a point after 2008 crisis where your rate of returns became a worry, things got shaky?
Whenever we feel some sectors are turning a little shaky, we keep them under watch and if possible, trade at the first opportunity -- so that the general return on portfolio is not affected. Maybe one or two scrips may go bad, but that’s natural. We have about 200 people sitting and watching the market with eagle eyes. So, a few laggard scrips will not affect our overall yield.