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Thomas K. Thomas

Move aimed at corporatising operations

MR I.M.G. KHAN

New Delhi , Jan. 8

In a bid to become more competitive and streamline its operations, Department of Post is planning to corporatise parts of its operations in the country. To start with, the Postal Department is looking to hive off its insurance business and real estate as a separate entity.

While the insurance division will be corporatised to form a new company, the DoP is setting up a Special Purpose Vehicle to tap the potential of real estate it owns. Both the businesses will have a separate management team.

Speaking to Business Line, the newly appointed Secretary of DoP, Mr I.M.G. Khan, said that the Government has asked it to invest the money accrued from its insurance schemes into the market rather than deposit it in the Consolidated Fund of India. "We are going to expand our insurance business in a very big way. We are being asked to invest funds from our postal insurance schemes on the lines of the guidelines specified under the Insurance Regulatory Development Authority.

We will be moving to that in phases at the end of which we will be like any other insurance company. The profits earned would be shown as earning for DoP." Currently, money from postal insurance is going directly to the Consolidated Fund of India.

Real estate

On the SPV for real estate, Mr Khan said that the move would enable it to raise funds from the market. "There is a huge potential in the vast real estate that we own. So, we are forming an SPV very soon to unlock the value. We want to exploit the commercial opportunity even as we offer better conveniences to our customers."

Mr Khan said that the Government would wholly own the SPV though partnerships with private operators will be an option. India Post has over 1.5 lakh post offices across the country some of them located in prime locations, which could be commercially used once the property is developed.

The move is aimed at creating more business opportunities for a department, which has been saddled with a budgetary deficit of over Rs 1,200 crore. Mr Khan said that the numbers should drop to less than Rs 1,000 crore with these initiatives.

"As these business pick up the budgetary gap will reduce faster. Hopefully, we should go below Rs 1,000 crore soon and if one were to discount the Universal Services Obligation, we should be in the black in 3-4 years," Mr Khan said.

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