According to a senior official, the Department of Investment and Public Asset Management (DIPAM) may decide not to consider any new CPSE for a strategic sale in the upcoming fiscal year in favor of wrapping up ongoing privatization transactions, such as IDBI Bank and BEML.
Upcoming Plan of DIPAM
In an interview with PTI, DIPAM Secretary Tuhin Kanta Pandey stated that while no specific company is on the list for the upcoming fiscal year’s initial public offering (IPO), listed CPSE subsidiaries will make offers for their shares.
According to Pandey, in the last three years, the combined market capitalization of banks, insurance companies, and central public sector enterprises (CPSEs) has increased by 500%, from Rs 15 lakh crore to Rs 58 lakh crore.
Additionally, from Rs 9.5 lakh crore in January 2021 to Rs 38 lakh crore now, the Government of India’s equity holding has increased four times.
In the context of a strong Indian economy, Pandey stated, “public sector enterprises have created enormous value, which has been due to robust performance, growth prospects, capital restructuring, consistent dividend policy as well as a calibrated disinvestment strategy.”
In addition to working on the privatization of CPSEs where preliminary Expressions of Interest (EoIs) have been received from potential bidders, DIPAM, which oversees government equity in public sector companies, is also involved in this process.
According to Pandey, the companies that have already received initial bidder interest and issued expressions of intent will be targeted for acquisition in the upcoming fiscal year.
Right now, we are not considering any other options. We want to follow up more efficiently and pursue the culmination of those transactions. We are concentrating on the conclusion, which we first believed would be finished in this fiscal year, but there is a spillover for some of the reasons that are inconsequential to us, Pandey stated.
In addition to IDBI Bank, a number of other CPSEs are being sold strategically; these sales were intended to be completed this fiscal year and include Shipping Corporation, NMDC Steel, BEML, and HLL Lifecare.
In reference to the government’s plan to dilute its stake in Hindustan Zinc (HZL), Pandey stated that there are uncertainties surrounding the management’s demerger plans, which could affect the plans for selling the stake in tranches.
Due to concerns about valuation, the government—which holds a directorial position on the HZL board—opposed the move.
HZL, owned by Agarwal, now intends to demerge the business into three distinct companies.
There were setbacks for us. Our original plan was to exit in phases and enter the market in accordance with the Supreme Court’s order. However, we later faced difficulties as a result of decisions made by the promoter and management that were at odds with our goals, such as related party transactions. There are now additional questions regarding demerger. Investors won’t be interested in the stock or willing to buy our shares until these uncertainties are cleared up, according to Pandey, who noted that the Ministry of Mines is closely examining all those issues.
The government owns 29.54 percent of HZL’s equity, while the promoter Vedanta group owns 64.92 percent. Approximately five percent of the remaining shares are held by public investors.
The government aims to raise Rs 50,000 crore from other capital receipts, such as proceeds from asset monetisation and disinvestment, in the interim budget for 2024–25.
Without using the term disinvestment, the government has projected that it will receive Rs 50,000 crore in 2024–2025 in the form of “Miscellaneous Capital Receipts,” according to the budget documents. Nevertheless, the disinvestment target for 2023–24 was set at Rs 51,000 crore in the 2023–24 Budget, which was under the same “Miscellaneous Capital Receipts” heading and totaled Rs 61,000 crore.
The entire “Miscellaneous Capital Receipts” head for the current fiscal year has been reduced to Rs 30,000 crore in the 2024–25 budget. The government has only been able to raise Rs 12,504 crore through disinvestment thus far in 2023–24.
