He also said the mega initial public offering (IPO) of Life Insurance Corporation (LIC) is expected by the end of the current fiscal, and the government is looking to collect Rs 50,000 crore as dividend from state-run companies.
Stressing that privatisation of Air India, BPCL, Shipping Corp of India, Pawan Hans, BEML and Neelachal Ispat Nigam Ltd would be completed this year, Pandey said change of ownership and control would boost the valuations of these companies.
“Covid actually hit us very badly… It is much easier to do a market transaction, much more difficult to do a strategic sale where the bidders will actually take control of the company and the due diligence process is extremely rigorous. There were controls on travel, gradually they have been lifted, our disinvestment is back on track,” he said.
Speaking at the virtual CII annual session, Pandey noted that “we intend to do Air India privatisation, BPCL privatisation, Shipping Corp of India, Pawan Hans, BEML and Neelachal Ispat Nigam Ltd this year.”
“On privatisation, on policy and implementation, we seem to be moving forward firmly. But I believe that if we are able to complete some of the privatisation that we have already taken up, that will give us a lot of fillip and learning.
“There was a big long gap of 17 years where strategic disinvestment has not happened in the private space, although some of them have happened within the CPSE space, which is a policy the government has been moving away from,” he said.
He further said these companies got sufficient interest from bidders and are now at the due diligence and financial bidding stage.
On strategic disinvestment of Container Corp of India, he said the expression of interest is also expected as soon as the land lease policy is finalised.
Besides, the much anticipated initial public offering of LIC is expected in the current financial year.
The listing of LIC will be crucial for the government in meeting its disinvestment target of Rs 1.75 lakh crore for 2021-22 (April-March). So far, it has raised about Rs 8,368 crore by selling stake in Axis Bank, NMDC Ltd and Housing and Urban Development Corp.
Pandey said a second Infrastructure Investment Trust (Invit) is likely on the cards for monetising GAIL pipelines.
He also said the ‘plug-the-gap’ approach will not be very helpful for disinvestment. Instead, “we have to have a reform approach. And the reform approach is the real operational efficiency of public sector enterprises will come through… change of control, change of ownership, which will give a lot of fillip.”
“We have seen if we have some listed company and we announce the privatisation, immediately the stock prices go up, so that means the market is valuing those enterprises more in the private hands,” he pointed out.
Finance minister Nirmala Sitharaman in her 2021-22 Budget speech had announced a big-ticket privatisation agenda, including privatisation of two public sector banks and one general insurance company.
“We propose to take up the privatisation of two public sector banks and one general insurance company in the year 2021-22. This would require legislative amendments,” she had said.
As on date, there are four general insurance companies in the public sector — National Insurance Company Limited, New India Assurance Company Limited, Oriental Insurance Company Limited and the United India Insurance Company Limited. Now, one of these will be privatised for which the government is yet to finalise the name.
In the 2021-22 Budget, the government announced the PSE (public sector enterprises) privatisation policy as per which all PSUs will be privatised, barring key firms in four strategic sectors of Atomic energy, Space and Defence; Transport and Telecommunications; Power, Petroleum, Coal and other minerals; and Banking, Insurance and financial services.
In these strategic sectors, the government will retain only a bare minimum number of PSUs.