Saturday Brain Storming Thought (132) 25/09/2021
COMPILED BY ER. AVINASH KULKARNI
ASSET MONETISATION
Asset Monetisation involves creation of new sources of revenue by unlocking of value of hitherto unutilized or underutilized public assets
Internationally, it is recognized that public assets are a significant resource for all economics
Hitherto Meaning
Until now or until the point in time under discussion
Asset Monetisation Transaction
The government is basically transferring revenue rights to private parties for a specified transaction period in return for upfront money, a revenue share, and commitment of investments in the assets
Assets
An asset is anything of value or a resource of value that can be converted into cash
Key assets identified by the government for Monetisation
1) 400 railway stations
2) 90 passenger trains
3) one route of 1400 km railway track
4) 741 km of kokan railway
5) 15 railway stadiums
6) selected railway colonies
7) 265 railway owned goods-sheds
8) 4 hill railways
Monetisation
Monetisation is the process of converting goods into money
Process of printing of money is also Monetisation
National Monetisation Pipeline (NMP)
NMP estimates aggregate Monetisation potential of Rs 6 Lakh crores through core assets of the Central government, over a four year period, from FY 2022 to FY 2025
Infrastructure line ministries
1) Roads, transport and highways
2) railways
3) power
4) pipeline and natural gas
5) civil aviation
6) shipping ports and waterways
7) telecommunications
8) food and public distribution
9) mining
10) coal
11) housing and urban affairs
Imperatives for core asset Monetisation
1) Monetisation of “Rights” not “Ownership”, assets handed backed to government at the end of transaction life
2) brownfield de-risked assets, stable revenue streams
3) structured partnerships under defined contractual frameworks with strict KPls & performance standards
Meaning of de-risked assets
Assets are less risky or less likely to involve financial loss
Estimated potential of NMP
1) time period FY 2022-2025
2) indicatively valued at Rs 6 lakh crores
3) roads – 27%
Railways – 25%
Power – 15%
Gas pipelines – 8%
Telecom – 6%
Key tenets to the public asset Monetisation purchase
1) keep the public assets (systems) in public hands
2) deliver meaningful upfront proceeds to the muncipality (city) to maximize sale benefits
3) capture and pledge all cash flows towards the repayment of debt and the maintenance of the system
4) professionaly manage the system during the concession period
5) return professionlly maintained and all remaining capital back to the city after concession/lease terms
Challenges for asset Monetisation
1) investors would prefer property utilised assets over underutilised assrts
2) valuation challanges
3) life of a returned asset may not be long
Example of asset Monetisation
The company could monetize the asset by selling the asset and leasing the asset space back from the new owner
Monetisation Strategies
1) advertising
2) one time in app purchase
3) subscription model
4) gamification
5) invitation rewards
6) all of the above
Meaning of Gamification
The application of typical elements of game playing (eg point scoring, competition with others, rules of play) to other areas of activities, typically as an online marketing technique to encourage engagement with a product or service
Primary business benefits of asset Monetisation
You can identify the potential to earn revenue from user content or you can see a potential loss of revenue
Asset Monetisation aims to tap the private sector investment for new infrastructure creation
Debt Monetisation
The term refers to the purchase of government bonds by the central bank to finance the spending needs of government
The exercise leads to an increase in total money supply in the system and hence inflation, as RBI creates fresh money to purchase the bonds
Monetizer
Monetizer are essentially securities traders who uses the instrument owners capital to make profit
Instagram Monetisation
The process through which you can make money out of your instagram account
You can leverage your engaged fan-following to promote brands in return for a payment
Its also possible to generate sales for your own products and services with it
Monetize on TikTok
Accounts with more than 1000 followers on TikTok can start live streaming and monetizing their vedeos
Users can buy coins that they later give away to users who are making live vedeos
When content creators make live vedeos and receive donations or coins, they can after exchange them for real money
Asset Recycling
It is the sale of underperforming or surplus assets to return the capital to invest in new assets or revitalise existing assets
Liquid Assets
It is an asset that can easily be converted into cash in a short amount of time
Unlocking capital assumption
The private sector can unlock efficiencies that government cannot
Public Assets
Means any property, tangible or intangible owned by government
Asset Monetisation will have multiple impact on economy
Compiled by:-
Er. Avinash Kulkarni
Chartered Engineer
Govt Regd Valuer
IBBI Regd Valuer
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