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Uday Kotak Says There is No 'Perfect Time' for Privatisation of Companies

File photo of Uday Kotak.

File photo of Uday Kotak.

Kotak said the sequencing of reforms in the current environment is critical, especially in the area of divestment.

  • News18.com
  • Last Updated: June 6, 2020, 10:39 PM IST
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Businessperson Uday Kotak, president of the Confederation of Indian Industries (CII), on Saturday said there is no "perfect" time when it comes to privatisation or disinvestment.

"On the whole area of privatisation, very often we hear the price is too low, therefore we have postponed it. My view is there is no perfect time. If we have made up our mind within a reasonable band of time we should go ahead and execute it," he told CNBC-TV18 in an interview.

The central government recently announced a long-term plan to decrease its stake in public sector enterprises.

Kotak said the sequencing of reforms in the current environment is critical, especially in the area of divestment. "First in the sequence are already companies which are announced -- Air India and BPCL. We need to do them right," he said, adding non-strategic public sector enterprises announced by the government would follow next. "Let us at this stage focus on these two and do them well."

Arguing that there was merit in privatisation, Kotak said, "Look at privatisation as not just the equity value but also the underlying debt that goes off the government’s shoulder as a headache. For weaker public sector companies, the amount at risk for the government and its fiscal sensitivity is not just the equity value of its investment. For a government-owned company, the entire debt in the hand of the company is interpreted as the liability of the sovereign."

This would enable the government get rid of a large potential liability in the form of the debt within the company, he added.

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