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The strategic disinvestment of Air India Ltd has been a learning curve which posed a series of legal issues and challenges, Tuhin Kanta Pandey, secretary of department of investment and public asset management (Dipam) said. On the day the government concluded the first privatization in more than two decades, Pandey said the divestment target of 1.75 trillion for this fiscal would not be met as the privatization of Bharat Petroleum Corp. Ltd (BPCL) will be pushed to FY23. He also said Life Insurance Corporation of India’s (LIC’s) embedded value is close to being finalized ahead of its public listing. Edited excerpts from an interview:

How difficult was it to overcome the challenges in strategic divestment of Air India, given the legacy issues and the covid-19 pandemic?

It has been very difficult, one due to covid, which caused huge difficulties in running any process. Second, it was Air India, a very complex organization having assets all over. Third, we had all kinds of obstacles—bidders’ issue, enterprise value, bidding construct had to change, then the due diligence process, then you had courts. For example, intervention by the Delhi high court, Madras high court, and unfair dragging of Air India by Devas shareholders in Quebec and US courts, which led to Quebec court ordering garnishing of the revenue. The issues of lenders’ approvals, third-party approvals, and the premature closure of non-convertible debentures, release of guarantees, besides getting antitrust approvals from different authorities. There were enormous challenges, but at the end of the day, we are now feeling relieved.

What’s the plan to monetize Air India’s non-core assets?

The plan has to be drawn up frankly because monetization itself is a very big exercise. Thanks to the MTNL assets being done through MSTC and Dipam, the process is now streamlined, but there will be a challenge as AIAHL (Air India Assets Holding Ltd, the special purpose vehicle set up by the government to hold half of the airline’s loans, four of its units, and non-core assets) has to get due diligence done, and so on.

Is LIC IPO on track for March?

LIC is a major event we’re working on. The embedded value has been worked out till March, and now they are on course to work out September because the fund bifurcation between par and non-par has taken place, after the LIC Act amendment, which was crucial since earlier LIC had only one fund. September accounts have been prepared and approved, all of this information has been fed to the valuer and they’re close to finalizing it.

Which divestments are likely to be closed soon? Is IDBI Bank’s expression of interest (EoI) on the cards for FY22?

Very soon, you will hear about Neelachal Ispat Nigam Ltd, and thereafter, it will be a rolling plan towards wherever things mature, we will go ahead with that. IDBI EoI can surely be done by March, but transaction will take place in FY23.

Is target of 1.75 trillion close to achievable for FY22?

I don’t think that we will be able to reach 1.75 trillion target; that looks unlikely. It would have required BPCL transaction to close, but I don’t think BPCL can close by March; so, therefore we have to go with a lesser number. Let’s see how much we get from LIC, which is a large transaction and what others we can conclude.

What are the issues being faced with BPCL divestment?

It’s a question of it being a very large transaction, which sometimes poses problem especially in petroleum sector, which underwent a lot of upheaval in the one-and-a-half to two years. In competitive bidding, bidders have to be comfortable to bid, but we have not reached that stage yet. 

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