Tuhin K Pandey, Secretary of Department of Investment and Public Assest Management (DIPAM) says valuation of Bharat Petroleum Corporation Ltd (BPCL) is yet to be done. In an interview with BusinessLine , he made it clear that there will be no more Exchange Traded Fund (ETF). He also said that some of CPSEs may not be able to complete the requirement of achieving Minimum Public Shareholding (MPS) within the given time frame. Excerpts:

Is asset monetisation proposed in the Budget like the concept of land bank?

In a way yes, but more like a doing organisation. There are two kinds of lands – government land and PSU land. Now, CPSE land is again of two kinds — one related to the listed company and the other related to the unlisted company. Listed companies are in a constrained environment while parting with their assets. In many cases, they go for de-merger. Sometimes, they go for own sale to get the revenue like Air India. For example NTPC, it has its own colonies or townships where it can do the monetisation.

When we do strategic disinvestment, then we take care of such activities like what we are doing for BEML or SCI. We will take their prime property and try to sell it as real estate, rather than just a part of operational companies because that will not actually fetch values. This means, we hive off non-core assets for listed as well as unlisted companies. The intention of such an exercise is to put the assets to more productive use. How you do that? First you create the consciousness that you should prepare the asset monetisation plan. It should be in the performance matrix based on that some marks will be allocated to CPSE for asset monetisation done, then subsequently for its execution also. In a way we are making management conscious for raising resources. Those resources, typically go to company and not to the government. Receipts for government will come only from government land.

The whole idea is you spur the National Infrastructure Pipeline.

A question now being asked is will BPCL be re-valued?

There is nothing called revaluation. How do you sell it? Basically you identify what are the entry barriers. This is a large company. In general financial capacity to close the deals we have said that there is $10 billion entry barrier. Then you come as a bidder and you do the due diligence and do a financial bidding. Parallely, we have engaged our own financial partner, what we call as transactional advisor and asset valuers who also do it independently. This is not known to bidders. Once financial bidding takes place and locked and then based on our transaction advise, we will fix reserve value. Then, when bids are opened, we will say you match the reserve value and then the government will decide.

There is one valuation in the market which is based on daily price movement and fluctuates based on certain news. Then, there is something called Volume Weighted Average Price (VWAP) of the stock. Then, there is something called control premium, because the bidder is going to control the company.

Bidders will also look for what are the prospective thing for a company. Valuation exercise is highly complex thing. We deliberately do not do our reserve valuation till about financial bids are locked in. Somehow, if there is leakage of the price, it will be compromised.

For 2021-22, what will be the key instrument ...will it be IPO and OFS or will it be ETF?

We are disengaged with ETF. At this moment, our whole focus is on the directional shift — after 1991 this is a big structural reform. We are saying we will be privatising except for the “ bare minimum” in certain strategic sectors.

There are four critical areas —national security; transport and communication; energy and minerals; and financial services. These are the four areas where government feels at this stage minimum presence is required. You should not only look at the enterprises, you should also look at the size of the enterprise as regards their market.

How many debt ETFs are being planned?

We will come with the next tranche of Bharat Bonds in May. The good thing is we have added a product where the retailer did not have any comparable project so therefore even if so many retailers have come, the AUM has increa Overall it is a good product to be there.

Will CPSEs will be able to achieve Minimum Public Shareholding within revised time frame given by SEBI?

On SEBI requirement of minimum 25 per cent public shareholding, our strategy is do as much MPS as possible. Many banks have an issue and even insurers have to get it done. But we are targeting on priority. But there could be few companies that gone down in profitability and some companies there is NIF which is seen as public shareholding.

There are certain difficulties in two or more cases where they may even have to be fined for non compliance.