Let LIC gain market share before another share sale, says India's disinvestment secretary

With the highly anticipated LIC follow-on public offer (FPO) on the horizon, Tuhin Kanta Pandey, DIPAM Secretary emphasises that there is no rush to launch the FPO, as LIC is focused on increasing its market share and making significant qualitative changes to its portfolio.

A: Coal India OFS has done well, we had the first day yesterday for QIBs and we got 3.46 times the subscription and today it also has gone well.

A: We will have Rs 4,000 crore plus proceeds.

A: I think the market situation is stable. The Indian economy has been growing very well. It was a 7 percent plus, 7.2 percent growth rate for the last year FY22-23. We have also — going forward for the 2023-24 financial year as well — the forecasts are on the upside.

Despite the headwinds, I think the Indian economy is doing better and capex also, there has been a good upcycle, particularly on government spending, capex has gone up well. So I think overall the market situation looks alright.

A:

As I said, I have been stressing it, that we have actually a dividend as well as the disinvestment put together. We have to look at it. The target is Rs 94,000 crore, put together for the current fiscal and we have a fair amount of — as I said that last year also — we had got good movement on dividend side; they continue to perform well and some of the indications are that the performances of the CPSEs continue to go very well.

We have a consistent dividend policy as you know, and therefore consistently, the CPSEs have been giving very good dividends. You would have seen several CPSEs who have declared results, even the final dividend. But more than the final dividend, I think even at the interim stage, they have been giving a fair amount of dividend. And I think that has been an important part of our strategy as well. On disinvestment as I said, we have a number of transactions that are on the pipeline, and we endeavour to take them to completion.

Some of the issues that we faced in these transactions are being sorted out. For example, in terms of some of these CPSEs, we had the issue of demergers. In NMDC Steel, we had in fact a very significant year last financial year in which we had three demergers. NMDC Steel has successfully been listed. Then BEML where be BEML Land Assets (BLAL) has also been listed.

Then there is a Shipping Corporation of India Land and Assets which is the land asset holdings of the SCI which is already demerged and now we are getting it ready for listing.

A: Well, I think on the BEML side, I would say that there have been certain last-mile clearances that also have to be organised from the government of Karnataka, especially. There was an issue with the government of Kerala that has been sorted out in terms of land and registration of the land which is there. There are certain issues relating to Mysore land still remain, with the government of Karnataka and I think that has been as for the court judgments and others, there will be, good movement, in my opinion, to forward on that.

Similarly, on the SCI LAL issue, we have also the last mile clearances from the government of Maharashtra as well. So these will be sorted out and I think then we will proceed forward with bidding.

A: I think we will let because we are just sorting out these last-mile issues.

A: IDBI Bank is, as we say, fit and proper sort of test which they have to undergo for the people who have been qualified. They have to be further qualified by the RBI in terms of their fit and proper test and following which there will be due diligence. So that is proceeding well.

A: Well, again, I will not exactly hazard the guess in terms of months, but yes, as soon as due diligence process is done, then I think we will proceed with bidding.

A: I think we have been endeavouring to complete several of those transactions which also include, for example, HLL Lifecare, where we are at a fairly advanced stage, which also includes Projects and Development India Limited (PDIL), which also includes Ferro Scrap Nigam Ltd (FSNL) and SCI BEML as I have mentioned and IDBI Bank, also the NMDC Steel so these are the transactions we have been closely monitoring in order to close the transactions.

A: We will let you know when we are ready.

A: Well, I think on HZL, you know about the government's stand and well, that is something which is actually now a thing of I would say past. Going forward I think we will continue the goal of how we can also come out of the residual in a certain calibrated manner.

A: On BALCO, our stance has been that we would like to go for public listing. I think we will engage the interlocutors along with the ministry of mines on that call.

A: There have been some discussions on that. But I think ministry of mines is taking a lead on that matter.

A: Let me make it very clear that we are in no hurry to bring in any kind of FPO on the LIC front. We have a general sort of powers regarding that and there is no hurry at all. There is a broader understanding about the strengths of LIC among a wider set of investors. I think LIC management is making a sincere effort in that direction to engage with the analysts, to engage with investors, while they continue to work on their strengths, and perform on several of those new things which they undertook to do.

For example, if you look at consistently their quarterly results, you will notice how clear they are about earnings. The earnings are showing a consistent increase and the last quarter earnings and the yearly earnings have been fabulous. They are making every effort to improve their market share, but more importantly, to have a qualitative change in their portfolio, and they have worked quite hard on the higher non-PAR business where they have plucked good growth. Their VNB margins have consistently improved over the quarters.

So, overall, I think a few quarters are important, because it became a listed company only in May 2022. And there was also some issue regarding the embedded value initially, that whether LIC would come out consistently with embedded value they have. So, as per their stand they come out with every half year, and they came with their embedded value calculations in September 2002 and as also on March 2023. And that has also gone up fairly well, from about Rs 5.4 lakh crore, it has gone up to Rs 5.84 lakh crore. So, I think it's very important to ensure that LIC continues to outperform themselves on several fronts, where they have chosen to do and communicate it effectively to the markets.

A: I will not comment on PSBs at all. That is for the Secretary DFS to respond. But I would say that the banking sector has done extremely well. And they are in a good position to raise capital if they need and also to make credit disbursals on a on a high growth path. And I think that's quite important for the economy.