A first: NLMC prepares groundwork for DRT-like bid of assets by September

Asset transfers to the corporation are getting held up due to delay in clearance by states

The National Land Monetisation Corporation (NLMC) is planning to conduct its first auction of small-sized immovable assets of certain central public sector enterprises (CPSEs) as a trial run by the end of the July-September quarter of 2023-24 to prepare for a large asset sale later.

“No big assets have been transferred to NLMC as yet. The company is working to develop a process to conduct the valuation and auction of these assets,” a senior finance ministry official told Business Standard.

NLMC was incorporated in June last year as a wholly-owned government company to carry out monetisation of surplus land parcels held by several CPSEs and government agencies.

Citing several examples to illustrate his point, the official said seven flats of Hindustan Cables and four flats of Bharat Pumps & Compressors located at Prayagraj have been transferred to NLMC. Both CPSEs are in the process of closing.

Another senior official said that NLMC is facing the issue of inventory shortages as the transfer of assets to the corporation is getting held up due to delays in the clearance of land transfers by state governments.

“Acquisition of assets by NLMC is getting delayed because land is a state subject. Some of these land clearances are also trapped in the judicial process,” he added.

The corporation is exploring the possibility of using the auction method of the debt recovery tribunal (DRT) and canalizing agency MSTC. Under the auction process followed by DRT, the highest bidder is sold the property through an e-auction process.

NLMC is expected to get its first full-time chief executive officer (CEO) and chairman by the end of June, enabling it to hold regular board meetings and expedite key decisions.

On May 15, the Ministry of Finance invited applications for appointing a CEO and a non-executive chairperson to the board of NLMC.

“The surplus land and unused buildings of CPSEs under closure are transferred at the book value to NLMC and do not reflect the current market valuation, delaying the procedure for asset monetisation,” said the first official.

NLMC has already invited bids to hire professional real estate consultants to evaluate the assets and ascertain the current market price of land holdings.

NLMC has an authorised equity share capital of Rs 5,000 crore and a paid-up share capital of Rs 150 crore.

The Department of Public Enterprises is the administrative ministry for NLMC. It will also advise and assist government departments, statutory bodies and authorities, autonomous bodies, and corporations on underutilised non-core assets.