DIPAM Secretary On Receipts And Policy Pivot From Strategic Sale To Value Creation

The government of India's Department of Investment and Public Asset Management target in FY25 is fundamentally different from that of the previous years, as it does not have a target figure.

The FY24 revised estimates show that miscellaneous capital receipts have been slashed to Rs 30,000 crore from the FY24 budgetary target of Rs 51,000 crore. This is however not the disinvestment target. Further, DIPAM receipts till date stand closer to Rs 12,504 crore, prompting the question on how the amount will be bridged.

Breaking down the considerations towards disinvestment, IDBI Bank Ltd. sale, Shipping Corp. of India Land and Assets listing, NTPC Ltd. green energy listing and more, here's what the DIPAM Secretary Tuhin Kanta Pandey told NDTV Profit in an exclusive interview on Friday.

Pandey said that public companies offer healthy dividends, which work in the opposite direction as disinvestment.

"What we are really looking for now is value creation ... and we have to also consider the incomes," he told NDTV Profit.

The consideration is towards growing wealth, ensuring good performance, subsequent market valuation, and only after that can it be monetised in such a way that people derive value from it, he said.

When the performance of an asset sees growth momentum, then the government also continues to derive income from it, adding to the wealth generation cycle in terms of capex, investment in new technologies, and healthier dividends, Pandey said.

The government, in its FY24 budget, pegged the Central Public Sector Enterprises dividend at Rs 43,000 crore. Currently, the government has reported Rs 44,217 crore and revised its dividend target to Rs 48,000 crore, while increasing its dividend estimate for FY25 to Rs 50,000 crore.

In terms of ongoing projects in the current fiscal, Pandey noted that Container Corp. of India Ltd. is yet to launch an Expression of Interest for its disinvestment, as the matter now rests with the Railways Department.

In the case of Shipping Corp. of India Ltd., demerger orders have been issued, but full implementation—including the allocation of shares of Shipping Corp. of India Land and Assets Ltd. and its listing on exchanges—is ongoing, he said.

The board (of SCILAL) has been recently constituted and they will have about a month's time from the date of the constitution to see that the listing is done, Pandey said.

The other part is also to have the No-Objection Certificate and clearance for the land because the land and assets, which belonged to Shipping Corp. of India, will now be deemed to be the assets of SCILAL—the new company—and that requires changes in the lease books of the Maharashtra government, he said.

"We have had a series of conversations with them (the Maharashtra government) and recently, the Maharashtra Cabinet declared the exemption of stamp duty charges and the demerger."

The process will now move on to the collection of NoCs for the lease changes, so that there is no overhang of the transaction on SCI—the demerged main entity.

After both the listing and NoC stages, SCI will begin the process of seeking financial bids, Pandey said.

"We are looking at the next financial year for this transaction... strategic disinvestment transactions are essentially time taking and on top of it is (a) bank where the regulator has shown very meticulous fit and proper tests," Pandey said, adding that the next stage is a separate due diligence before financial bids are called.

In terms of whether the transaction would go through in the first half of FY25, Pandey didn't offer a specific timeline but said that the government would be patient with the due diligence exercise.

Pandey also mentioned that the current year receipts will likely be split into Rs 18,000-20,000 crore from disinvestment receipts and the balance Rs 10,000-12,000 crore from asset monetisation.

"There is no specific disinvestment target or there is no specific asset monetisation target, it's a combined thing and anything of that category can get in there," he said.

In terms of whether the green arm of NTPC Ltd. is up for public fundraising, Pandey said that there is a delegation for downstream subsidiaries, which can be steered by the boards of the companies and not by DIPAM.

"If the companies want to disinvest or they want to close their units or subsidiaries, then they can take an in-principle approval through DIPAM. We take the minister's approval called alternative mechanism and an in-principle approval is granted to them. We have issued guidelines and based on that guideline, their boards can go ahead with that," he said.

In September 2022, DIPAM issued detailed guidelines for public sector enterprises on dealing with their downstream investments.

"NTPC will seek approval from the alternative mechanism through DIPAM... They are yet to seek (approval) and following that, they would be in a position to go forward on that," he said.

"But that has been our general stance, particularly in the case of NTPC, that they can put their renewable energy into a separate company... But it will be under the rubric of NTPC Green Energy Ltd., and NGEL itself is a subsidiary of NTPC."

NGEL can be made public and can be listed, Pandey said, adding that the department "would encourage them to go forward."