The Department of Investment and Public Asset Management (DIPAM) Secretary Atanu Chakraborty is hopeful of a strategic sale, with the launch of debt exchange-traded fund (ETF) next fiscal. Talking to BusinessLine after the Interim Budget 2019-2020 presentation, he said that with this fiscal’s transactions already in place, the code of conduct that will come into force with the announcement of general elections would not affect the sell-offs. Excerpts:
On revised estimates being same as Budget Estimates for disinvestment
Many of the transactions actually do not depend on market any more. Besides, we are not going to do everything in 60 days, but once one of the transaction starts de novo in the 60 days, rest of the things will be in place — processes, approvals, launching them. Most of them are actually on tail end. Very few of them are in the starting phase. As I talk to you, I am expecting cash flow of two of the transactions already next week. I am optimistic about meeting the target.
Will the poll code of conduct affect sell-offs?
This fiscal’s transactions are already in place, so it shouldn’t. However, for any new transaction to be launched, one has to pass that test. But, to that extent next quarter, early part, we can, which we normally do, prepare the pipeline and build it up so we can spend more time building it up. At the most it is May 15 or by the third week of May the code of conduct will be over and till then we’ll be preparing the pipeline. So, it has a very limited impact. And if we go and convince the Election Commission that it does not really affect the elections in the material way, which I believe it doesn’t, then there won’t be an issue. By the time, code of conduct comes in we would have completed 95 per cent of our transactions.
Any innovative idea for the 2019-20 target of ₹90,000 crore?
We will see more cases of asset monetisation next fiscal, but not in a huge fashion which will lead to large monetised amount with us. However, it will be much more than just sprinkling. Since we are on the learning curve, I am unable to comment on size and other issues. At this stage we are putting together entire mechanics. You should also see lot of IPOs because we are pushing for listing of as many companies as we can, it is very important. We are also pushing for IPOs of subsidiaries, second FPOs for the companies which need to meet the minimum public shareholding targets, and other means such as ETFs, strategic sale will be there.
Why is strategic sale not picking up?
Cabinet approval for strategic sale came in October 2017. Building up procedure itself took some time and procedure again had some inherent problems and various stakeholders also did not understand how to do it. And in many places because of that natural diffidence creeped in. Many times, we tend to look at from our side how to maximise it and in the process forget or overlook some of the risk which investors may be seeing but we are not able to see. These are the nature of few things which did not allow us or precluded us from showing us better result on strategic disinvestment despite the fact that 24 which have been identified are on block.
But, now I am seeing at least 5-6 of them moving towards tail end of transaction completion. Also because of market behaviour during the last six months of last year which put off lot of people who otherwise would have come in. NCLT also gave them another opportunity to put their money. Let’s face it, NCLT is also a competing source from where people would try to get hold of certain good vehicle to buy. All these certainly push back the thing but it is not a set back.
On integration of NTPC with SJVN...
NTPC did make a proposal to us and we see something very positive in it. It makes NTPC a large behemoth and entry into array of energy production which is renewal, improves their value, while for SJVN, it will help in their need for investment. The government will not put in equity investment. They will be hobbled for additional equity without which debt can’t be raised. A win-win situation for both of them. We have referred it to the Ministry of Power, which is the operating Ministry, to come out with a proposal.
Progress on debt ETF...
We are trying to look at what are the pitfalls and structuring it. Let’s face it, India does not have, till date, anywhere, other than certain mutual funds, where investors can participate in retail fashion in debt. The size required is large. What units were to equity, debt ETF would be to the debt market. However, for an attempt like that we have to be very sure that public faith which come in large number is not belied or we don’t make any mistake. \
We are extra cautious on that and trying to ensure that all ends are tightly sewn up. That is why it has taken sometime but I find all regulators have shown lot of interest in this. They really want market to have this instrument. Even from the asset management company, we have good response and investors have also shown interest. Product structuring is taking some time, so I expect first or second quarter of next fiscal. Certainly, we don’t want to do this fiscal.