WE ARE BUILDING A STRATEGIC DISINVESTMENT PIPELINE

The pandemic had put the brakes on the government’s ambitious disinvestment plans for the fiscal. However, things have started picking up as businesses go back to normal and markets regain their appetite for buying assets. The Department of Investment and Public Asset Management (DIPAM), entrusted with disinvestment of central public sector enterprises (CPSEs), has an uphill task ahead given that it is racing against time to meet the annual disinvestment target. DIPAM Secretary Tuhin Kanta Pandey, in a conversation with Dipak Mondal, lays down the road ahead for the department.

Dipak Mondal

The Union Budget targeted ₹2.1 lakh crore disinvestment, of which ₹1.2 lakh crore was to come from CPSEs. Latest data shows only ₹5,000 crore has been realised.

All pre-Covid Budgets across the world have gone topsy-turvy. The Coronavirus pandemic is an unprecedented event. Things changed beyond anybody’s comprehension. Nobody anticipated that there could be a lockdown and people would not be able to travel for months together. Therefore, talking of a February budget under these extra-ordinary and uncertain circumstances may not be appropriate. We have to see going forward what we can do.

What is the realistic target now?

There is no specific number as on date, because our effort has been to look at what we can do during and post-Covid. So, we should do whatever best we can. If you get fixated with target numbers, then you need to factor in the several lost months.

The issue is what we can do, and what we have been able to do. In July, because the debt market was doing well, while the equity market had crashed, we raised more than ₹10,000 crore through Bharat Bond ETF for CPSEs. It gave a fillip to capex proposals of CPSEs. We encouraged them to go to the market and raise bonds. They are well on course, trying to do their own capex, which is an important means of reviving the economy. When private sector appetite is not so good, because of these efforts, public investments have been accelerated. But because these funds were garnered through these bonds, they will not show up in disinvestment receipts. You need to look at DIPAM not merely from the disinvestment angle. We are actually into capital management of CPSEs.

Regarding disinvestment of equity, we need to see the impact of Covid on PSU stocks in general and specific sectors in particular. The quantum of receipts is a function of the number of shares and their value. If the value is too low, it may not be worth to dispose of stocks at a very low valuation. We need to have perseverance.

As the equity market revived, we participated in some things we could do — bringing stock to market where liquidity is low, where you don’t actually have adequate stock in the market, because that’s something which is being demanded by the market. For example, if you are below minimum public shareholding norms, then according to Sebi’s requirements we need to achieve it. So we have treated that as a priority.

So, what is your Plan B now?

When you say Plan B, it is like changing strategy. Some of those are not just doing things, but in the manner we may take up our transactions. We came out with the ₹444-crore Mazagon Dock initial public offering (IPO) and broke the jinx that PSUs cannot be listed effectively. It received subscription of ₹65,000 crore (157 times the amount on offer). You may see it as a small number, but Mazagon Dock can encourage other IPOs of the government. That will bring new stocks to the market. It does not affect other stocks like price overhang, which happens when we keep coming to the market frequently for an existing stock. The price does not rise, and investors don’t get returns — giving a poor perception of PSU stocks. We have to change that perception.