The shortlisted bidders for fuel retailer-cum-refiner BPCL and national carrier Air India (AI) are probably to be asked to submit their economic bids in a couple of months, as the government intends to full the two transactions most up-to-date by July-August if not early, an official supply told FE.
Even although the division of investment and public asset management (Dipam) had set a target to full the transactions by June-finish, the government may well have to give shortlisted bidders a tiny bit of added time if necessary to full their due diligence of the firms and their assets.
“Covid-19 has affected travel, especially from overseas. Some bidders may need to bring in experts from overseas for valuation of the assets and/or physical verification of plants and equipment to assess their real worth,” the official stated.
On November 16, 3 bidders showed interest for BPCL buyout — Vedanta, Apollo Global Management and Think Gas.
After failing to conclude most of the large ticket bargains such as BPCL sale in FY21 and pared the target to just Rs 32,000 crore from initial estimate of an ambitious `2.1 lakh crore, the Centre is significant about reaching Rs 1.75-lakh-crore target for FY22.
The worth of the Centre’s 53% stake in BPCL, which was down 35% to Rs 39,000 crore as on October 16, 2020, from Rs 60,000 crore in November 2019 (about the time the stake sale proposal was authorized by the Union Cabinet), has recovered to a tiny more than Rs 50,000 crore as on Tuesday. However, the actual receipts will rely on valuation and consideration of a premium.
BPCL operates 4 refineries in India, Mumbai Refinery (1955), Kochi Refinery (1966), BORL-Bina Refinery (2011) and Numaligarh Refinery (1999) with a combined crude oil refining capacity of 38.3 MMTPA (766 KBPD). BPCL’s stake in Numaligarh refinery will be sold to yet another CPSE oil firm separately.
The officials are optimistic of the AI deal going by way of this time. The bids for AI are probably to be beneath Rs 20,000 crore. The Centre could get about Rs 3,000-crore money. With Covid-19 hitting the aviation sector tough, Air India has estimated that its money losses would rise 80% on year to Rs 6,000 crore in FY21. Air India CMD Rajiv Bansal had stated that the carrier’s losses could be about Rs 8,000 crore in FY21.
Besides BPCL and AI, strategic disinvestment pipeline for this fiscal contains Shipping Corporation of India, Container Corporation of India, IDBI Bank, BEML and Pawan Hans – are all anticipated to be completed in FY22. Additionally, privatisation of two public sector banks and one common insurance coverage business are to be taken up in FY22.
The IPO of LIC was the second greatest element of the budgeted disinvestment target for this fiscal. While the valuation of the insurer – which typically plays White Knight to the government – will be identified closer to the listing, it is believed to be worth Rs 8-11.5 lakh crore, which means a 10% IPO could fetch the government Rs 80,000-110,000 crore.
The LIC IPO may well hit market place in the third or fourth quarter of this year as preparation of embedded worth and restatement of accounts of LIC may well to take about six months.