‘Privatisation of PSUs takes time, beset with many issues’

These are competing goals — sometimes they are in continuum and sometimes they are in the opposite direction.
‘Privatisation of PSUs takes time, beset with many issues’

Tuhin Kanta Pandey, secretary, Department of Investment and Public Asset Management (DIPAM), tells Dipak Mondal and Monika Yadav about the government’s plan on disinvestment and privatisation of PSUs. Excerpts:

Has there been any change in the government stand on disinvestment or privatisation over the past three-four years?

Disinvestment has to be put in perspective of the overall public asset management. We have a fair amount of conviction that we should be doing public asset management in a way which is consistent with different goals and objectives.

There are various competing perspectives in public asset management, and disinvestment through equity is one of them, and strategic disinvestment is another. These are competing goals — sometimes they are in continuum and sometimes they are in the opposite direction.

So, public sector asset management is not chasing one target. It is more of a balancing exercise for the government.

Why have you lowered the disinvestment target?

Only when the PSU is handed over (to another company), that the amount will come to you. There is no point in building up (expectation) every year, if we are not able to conclude the transactions. When you talk about the fiscal deficit or revenue generation, we have a `47-lakh crore budget. In `47-lakh crore budget, what is the significance of that (proceeds from privatisation of a PSU).

You have disinvested fast in the past, at least on the market side (dilution of stake through initial public offers and Offer for Sale), if not on the privatization side. In many of our large companies (government stake) is already at 51%. You cannot go down further. So, can you set a higher target?

The finance minister recently said she won’t mind diluting stakes in some of the large PSUs below 51%. Your view.

In principle you can, but every implication has to be studied. From a liquidity point of view, 49%is good enough. From a resources point of view also, if you have to do, you have to see what will be its impact. There will be bondholders who would not like the government stake going below 51%. It is in the covenants also. So, it is not a simple thing.

Has the government gone slow on privatization?

I would say we are learning in case of privatisation. We are finding solutions but we are also facing bottlenecks. So, we are also realising what to do in an M&A transaction or what it requires to do such transactions involving government enterprises. We have realised that some of the things that the private sector can do relatively easily, it is slightly difficult for us.

If you have non-core assets, we have to squarely deal with non-core assets. We cannot just part with those assets easily because of the valuation concerns. For example, if we had not taken out Air India Building, Vasant Vihar Houses and all those properties, we would not have such a smooth transaction. Everyone would have said that Air India Building was sold at cheaper prices.

Then there are issues related to demerger of non-core assets. There is a different process of demerger as some of these PSUs are listed companies.

BEML does not have land deeds. They have been in Mysore for 30 years, and they don’t have land deeds. We are getting the documentation completed because who will buy a company without documents.

All I am saying is that strategic disinvestment transactions are time-consuming processes beset with several issues.

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