SPV for land, asset monetisation of PSUs soon: DIPAM Secretary

Department of Investment and Public Asset Management is working to implement the Budget announcement for having a specialised entity to monetise non-core assets

The special purpose vehicle (SPV) for monetising land and other surplus assets of public sector enterprises would soon be launched, and the entity could help in utilising land parcels for urban renewal and development projects in future, said DIPAM Secretary Tuhin Kanta Pandey.

Department of Investment and Public Asset Management (DIPAM) is working to implement the Budget announcement for having a specialised entity to monetise non-core assets, Pandey said.

Many public sector companies have many land assets in metro cities and prime areas and such assets are not adding to their valuation, Pandey said. This is because these public sector undertakings (PSUs) are financially weak, but continue to have such land parcels, he added.

“I think that value can be discovered and unlocked if we demerge some land assets and actually look at it as a real estate, rather than as a part of an operating company, Pandey said at the Capital Market Conference organised by industry body FICCI.

The Finance Act creates an enabling environment for demerging land parcels of PSUs by exempting payment of capital gains tax and stamp duty, he said. 

DIPAM is working to create a land pool through the SPV that is aimed at making a competent body for monetisation of assets.

“Next 5-10 years would become a very big thing, because we have so far not started valuing land that we have. And a lot of land could be used for urban renewal..and good strategic land can be made available,” he said.

Privatisation on course

The government is “striving” to complete privatisation of PSUs announced in the Budget, including Air India, Bharat Petroleum Corporation, and BEML in the current financial year, Pandey said.

“I would certainly say Air India we are very keen...despite the problems, we may have some delay because of COVID but broadly disinvestment is on track,” he said.

BEML, Shipping Corporation of India, Neelachal Ispat Nigam, BPCL and Air India are the companies where the disinvestment process is underway. "We are striving to complete it this fiscal," he said.

Pandey also said that initial public offering of Life Insurance Corporation of India (LIC)--to be launched in January-March 2022--will be a global event as it’s expected to be the largest issue that the country has seen.

“LIC IPO will give larger numbers and that itself will be a very big event for stock markets, not only in India, but around the globe,” Pandey said.