No  plan  to  take LIC to markets in FY24: Tuhin Kanta Pandey

Disinvestment is affected by market conditions. When we want to sell, there will be a buyer, and their thinking also matters a lot.

Gulveen Aulakh, Subhash Narayan
Updated3 Feb 2023, 06:31 AM IST
Dipam secretary Tuhin Kanta Pandey.
Dipam secretary Tuhin Kanta Pandey.

The government does not plan to sell additional shares of state-run Life Insurance Corp. of India to the public in FY24 due to unfavourable market conditions and weak retail demand, Tuhin Kanta Pandey, secretary of the department of investment and public asset management (Dipam), said in an interview. Events that adversely affect the markets have repercussions on disinvestment deals as well, Pandey said, alluding to the sell-off in the Adani group stocks and its impact on the wider market.

He said the government would aim to meet the revised FY23 target of 50,000 crore and the FY24 target of 51,000 crore despite market volatility. Edited excerpts:

Adani Enterprises is learnt to have expressed interest in Concor and other disinvestment deals. Given they had to pull their 20,000 crore follow-on public offering (FPO), will this become a challenge for meeting disinvestment targets?

I would not like to comment on any specific corporation. Overall disinvestment is affected by market conditions. When we want to sell, there will be a buyer on the other side and, obviously, their thinking also matters a lot. For instance, post-Ukraine crisis, inflation became a worldwide issue, and some investors exited emerging markets as they wanted to secure their money where returns were higher. I would say that we have also tuned our investment strategy to see that we do not play a short strip to minority shareholders when they invest in CPSE stocks. We’re asking CPSEs to ensure corporate governance, maintenance of profitability and consistent dividend, and invest in capex that yields results.

The one-year period barring a follow-on offering for LIC, ends in May. Will it happen in FY24?

We’re not looking at it right now. We’re considering factors. We’re seeing if there’s less bandwidth for disinvestment to go through if markets are not favourable; if there are sectoral issues; whether it’s a good product to sell at that time; the impact it can have on minority shareholders; that we do not bring (a stock) repeatedly at a discounted (rate). We’re also mindful that there’s stability in the market because if you get too much of supply, the price might depress further. So, it requires a calibrated approach to keep value in the CPSE stock.

The disinvestment target for FY23 has been cut to 50,000 crore, and for FY24 almost kept the same at 51,000 crore. Are they achievable?

We will certainly try to achieve them, but it is challenging as well because disinvestment depends on demand and buyers and varying market conditions. The numbers that we’re discussing are for 14 months hence. We will try to complete our ongoing transactions that are in advanced stages—Shipping Corp, BEML and others—in the next year. We will try to issue the expressions of interest (EoIs) for Container Corp. within this fiscal. A disinvestment target is an estimate, but it cannot be worked out that a certain deal will fetch a certain amount. Also, in disinvestment, the issue is that you get the full amount or nothing.

With consistently lower targets over the past two-three years, is divestment falling off the radar?

I would say we’re learning the realities of disinvestment. There are a lot of factors at play: stock market fluctuations, the interest of FPIs (foreign portfolio investors), etc., so we have learnt to work under the uncertainties and also what it takes to do full privatization, which is a very intensive exercise that involves structuring something, demerger in case of non-core assets, which will need more time. Then there are legal challenges, and community and political resistance, which delays due diligence. So the targets are pragmatic but not a cakewalk.

Are dividend proceeds looking up?

We are looking at dividends also, and disinvestment put together because it’s after all the money raised for the government. Sometimes, if we do not have the right opportunities to disinvest, we still continue to maintain the dividend. For FY23, 1.05 trillion was a target for the current year, and we have been able to do something like 68,000 crore so far. Similarly, for FY24, our target is 93,000 crore which includes 43,000 crore of dividends. We will try to achieve it. In FY22, we achieved 59,000 crore as dividends against a target of 46,000 crore.

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First Published:3 Feb 2023, 06:31 AM IST
HomePoliticsNewsNo  plan  to  take LIC to markets in FY24: Tuhin Kanta Pandey

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