Air India disinvestment process will happen after its financial accounts of 2018-19 are finalised (around May) for buyers to understand better the asset-liability of the company.
The disinvestment pipeline for FY20 might include sale of the Centre’s 63.8% stake in SJVN to NTPC, a new ETF, 10 IPOs, a clutch of offer for sales, buybacks and a new instrument for the CPSEs’ asset monetisation to achieve a stiff target of Rs 90,000 crore set in the recent interim Budget, Atanu Chakraborty, secretary, department of investment and public asset management, told FE’s Prasanta Sahu. The CPSE assets to be monetised could include core assets such as pipelines of GAIL, transmission lines of Power Grid Corporation and telecom towers of MTNL/BSNL, he added. Edited excerpts:
What is the pipeline of disinvestment for the next year?
We already have a clutch of firms approved for strategic disinvestment (such as Bharat Pumps and EPI). As far as IPOs are concerned, we are planning about 10 listings, at least two IPOs in the first quarter itself. Then there are several companies that have to meet their minimum public shareholding targets (of 25%) which would be brought in. Of course, there would be a clutch of buybacks and offer for sales, ETFs, etc. We are bringing in a new asset monetisation instrument.
Have you identified the CPSE assets to be monetised?
We have prepared six-seven models for asset monetisation depending on the asset classes. It can be a plain-vanilla sale in case of land, sale after development (such as residential flats by NBCC) and in case of a buildings, it can be a real estate investment trust (REIT). Gas pipelines of GAIL, transmission lines of Power Grid Corp, telecom towers of BSNL/MTNL are obvious targets for asset monetisation. Being the first year of asset monetisation, I will expect modest contribution to disinvestment from asset monetisation in FY20. World over, companies want to be asset-light. Asset monetisation of not only non-core assets but also core assets by firms have been a worldwide trend. I see no reason why our PSUs should not follow this trend to reduce their risks. PSUs would be allowed to keep a significant portion realised from monetisation for their capex.
Is there a plan for NTPC to buy the Centre’s stake in SJVN next year (on the lines of the PFC-REC deal slated for Q4FY19)?
NTPC has made a proposal to this effect (the deal could fetch close to Rs 10,000 crore). We are expecting a response from ministry of power.
What is the progress on the planned Air India disinvestment?
We are moving in the direction of strategic disinvestment (privatisation) in the airline. We are already putting out AIATSL (AI’s ground handling arm) for sale and we have decided to shift its debt worth Rs 29,600 crore to an SPV. The proceeds from sale of non-core assets of AI will be used to repay the loan being shifted to the SPV. Air India disinvestment process will happen after its financial accounts of 2018-19 are finalised (around May) for buyers to understand better the asset-liability of the company. We also have to see how global crude prices are behaving at that point in time.
Will the government fully exit Air India?
The Prime Minister has said the government is not in the business of running non-strategic businesses. Close to the transaction, the government will decide whether keeping some stake helps it to reap a better value in future or whether to sell it off completely.