By Subhash Narayan

New Delhi, Jul 22 (IANS): The Government is planning a major asset monetisation this year that may focus on spinning off loss-making subsidiaries of public sector enterprises (PSEs) into separate entities and selling these non-core assets to potential suitors under a competitive bidding process.

The proposed move aims to unlock value from potential idle assets of PSEs that could help Centre mobilise additional resources under its disinvestment programme. The government is targeting highest-ever disinvestment proceed of Rs 1,05,000 crore in FY20.

As per the latest official data, there are around 120 subsidiaries of 169 CPSEs and most of them are loss-making enterprises. Several of these would be identified by the disinvestment department DIPAM for sale under the strategic disinvestment route.

"Asset monetisation would be a tool that would be used extensively to mobilize disinvestment proceeds for the government. While selling core assets and revenue generating ventures of PSEs would be left to the board's of companies, all non-core assets and loss-making entities and subsidiaries could be pooled and spun off for sale by DIPAM (Department of Investment and Public Accounts Management). This is already being done in the case of loss-making PSEs under strategic sale route," said a top government official privy to the development.

This new asset monetization plan would mean that non-core assets and loss making subsidiaries of even large profit making PSEs may be sold off lock stick and barrel. The difference under the process would be that proceeds from such sale would not go to the parent PSE, but government will take the entire booty and boost its disinvestment proceeds.

Official sources said that among large PSEs, the exercise could be undertaken with coal sector behemoth Coal India (CIL) which has eight subsidiaries. Five of these subsidiaries are profit-making, while remaining is in losses. The loss making could be taken out of CIL and strategic investor may be roped in. Similar, exercise could also be undertaken for closed or loss making power units of NTPC, loss making units of SAIL and a few other PSEs.

Speaking to IANS earlier in an interview, Atanu Chakraborty, secretary, DIPAM had said that they would follow a case-to-case approach in terms of identifying companies for asset monetization.

"It's (asset monetisation) a complex process but gains from such exercise would be treated as proceeds from strategic divestment. It will go on case-to-case basis on what would be the principles of sharing. But since it is non- core asset to the concerned CPSE with no credible financial use, obviously the promoter-- Government - does deserve a share," the secretary had said.

Apart from asset monetization, the government may also push central PSEs to unlock value from its subsidiaries by merging it or listing the entity. Experts believe that such exercise may benefit companies as listing will raise resources and improve valuations. This will ultimately also support higher dividends to the government.