Disinvestment not off the table, focus on Public Asset Management says DIPAM Secretary

What we are saying is that disinvestment strategy is getting subsumed into overall public asset management strategy. We are saying, our focus is public asset management which means value creation. We are not really saying that fiscal deficit is the driving force behind it. We are saying public assets have to be managed well and we have to create value also because in many of these public assets, we have brought in outside shareholders where government was earlier having 100 per cent. They have come because they trust our management and expect good returns. So, we have to give them good returns.

Return is that overall value, value in terms of their stock value. The change in stance is that we are not driven from fiscal angle or to just garner some resources come what may but manage our public asset in its own right. Disinvestment is subservient to this strategy. It is not that disinvestment is off the table or it will not happen because disinvestment is a very important part of public asset management strategy. If you don’t list it that means ministry will only manage it. The moment you list it, you have independent directors, you have market analysts, your quarterly performance is viewed. Entire corporate governance undergoes a sea change. The primary goal is not resource raising but primary goal is public asset management.

The fit and proper examination is with RBI of the shortlisted bidders. They are at advanced stages, I am told. As soon as we get it, we will move forward with our next stages and hope that we will be able to make substantial progress.

It depends upon how much of time for due diligence will be needed but hopefully, we should be able to get the financial bids this fiscal.

It is difficult to give time line for individual cases because it also has to be co-ordinated with the ministries. There is change in record. There is an EPF trust issue which they are sorting out with labour because the trust has not been approved at all for long time. In some cases, there is a post medical scheme for which separately trust is to be created because the company cannot be burdened going forward. All these things such as correction of records in leases are important. Listing of demerged entity has been done but there is replacement of the name SCI with SCILAL. We will take stock of all these and move forward.

There are 164 parent CPSEs. Some of them are purely non-profit. Some are too small and some are under closure. Out of these, 61 have already been listed here. There are three or four which have become subsidiaries such as HPCL is now subsidiary. We will see how many can be listed but I think in the subsidiary space, there are now some big CPSEs emerging such as NTPC Green and other green companies. We have to see at what stage they can be brought into the market because they should have some substantial valuation when they are brought to list. In some cases, we can say, based on order book, whether we can raise capital from the market like in case of IREDA.

The policy was prescribed 2016 and then we had amendments in terms of interim dividend policy approach. That means it is not an annual dividend that we should target. We should also distribute in the form of interim dividend as you go. That is a much better strategy of distributing money as you go rather than simply keeping it for another full year and then distribute only at the annual general meeting next year. I do not think that there is a need for much of a change in that policy although we are doing a review of these guidelines. We have asked for suggestions lso from CPSEs. It is important to note that we are not maximising dividend.

Public asset management strategy would really keep in mind a very important consideration of growth. You have to have good fundamental performance on financial parameters but you should have a growth plan and execution of that growth plan. Your management incentives should be fully aligned with that. You should communicate that performance well to the market and you we should have, as a promoter, a calibrated disinvestment strategy. All these five elements should be well coordinated in order to derive maximum value which is our theme of value creation. If you are saying maximising dividend, it is a fiscal approach, it is not a public asset management approach. We are saying consistent dividend and not maximum dividend.

We have to look at the policy and reconcile with public asset management strategy. Of-course, there is a timing issue and there is a policy about that. Timing will depend upon various consideration. We have to balance the PSE policy with the public asset management approach.