IDBI Bank has 120 properties; deferred tax assets worth ₹11,520 cr, says DIPAM

The government has informed prospective asset valuers of IDBI Bank that the bank has deferred tax assets of around ₹11,520 crore on its balance sheet. The Centre adds the lender has 120 properties in the top 7 cities of the country, which comprise nearly 94% of the written-down value of fixed assets of IDBI Bank. Also, physical fixed assets like land and buildings, etc., constitute around 3% of the total assets.

The bank has a maximum of 68 properties in Mumbai; 20 in Pune; 9 in Chennai; 7 in Ahmedabad; 6 in Kolkata; five in Delhi; and 5 in Hyderabad.

The deferred tax generally means the overpayment of tax by a company, which is then adjusted in future payments of taxes. The information was put out by the Department of Investment and Public Asset Management (DIPAM) in response to clarifications sought by the prospective bidders.

Among other queries, the prospective bidders had asked for information on the assets of IDBI Bank, including fixed assets, assets given on lease, and CWIP assets, along with their brief description, location, and area; list of fixed assets under the purview of land & building valuer; and details of location, type, and size of the properties under the asset base with relevant sale deed or title deeds.

DIPAM says a complete list of IDBI Bank’s fixed assets and relevant documents will be provided to the appointed asset valuer after the execution of the confidentiality agreement. On providing the list of intangibles, DIPAM says the asset valuer will further identify intangibles -- not on the IDBI Bank balance sheet like brand name, or branch network -- and value these as a part of terms of reference.

The Centre, along with LIC, plans to divest a 61% stake in IDBI Bank. The Centre is looking for an asset valuer to conduct the valuation and the final date to submit bids is October 30, 2023. As part of the disinvestment plan, the Centre will offload a 30.48% stake in the lender, while the Life Insurance Corporation of India (LIC) will sell 30.24% in IDBI Bank. LIC and the government currently own 49.24% and 45.48% stake, respectively, in IDBI Bank, which collectively accounts for 94.72%. The remaining 5.29% of shares are owned by retail investors. After the divestment process, the stake of LIC and the government will be reduced to 34%.

"The Asset Valuer is required to fair value assets as well as liabilities of IDBI Bank. No distinct valuation for breach of contracts on account of strategic disinvestment is envisaged in the Terms of Reference," says DIPAM.

On the valuation of subsidiaries and associates, DIPAM says the assets of subsidiaries or associates of IDBI Bank are not envisaged to be valued individually. However, the asset valuer is required to value the investments of IDBI Bank in such entities based on acceptable valuation standards.

In January this year, the government received an Expression of Interest (EOI) from the potential buyers. Both the government and the Reserve Bank of India (RBI) are evaluating the bids currently.

The IDBI stock dipped 1.73% to ₹69.75 on the BSE today. During the session, the shares of IDBI Bank opened a tad higher at ₹71 against the closing price of the previous session at ₹70.98 and fell to an intra-day low of ₹69.50. At the current share price, the bank's m-cap stands at ₹74,998.01 crore.