NEW DELHI: State-run developer NBCC (India) Ltd may acquire three other government-owned entities to create a mega construction company, in line with the push for consolidation among public sector firms.
The three that the NBCC could acquire include Engineering Projects (India) Ltd, Hindustan Prefab and Hospital Services Consultancy Corporation (India) Limited (HSCC).
The government has already invited expressions of interest (EOI) from similarly placed central public sector enterprises (CPSEs) for strategic sales in HSCC and National Projects Construction Corporation Ltd. The government is looking to sell its entire stake in all these companies.
NBCC is a Rs 22,000 crore market cap navratna company that executes government projects, housing schemes and infrastructure projects.
Consolidation of CPSEs will improve economies of scale and value of investment in the company, a senior finance ministry official said. “It is a commercial decision which the companies have to take. We are following the whole process in a transparent manner,” he said. Finance minister Arun Jaitley had noted in his FY18 budget speech that the government sees opportunities to strengthen CPSEs through consolidation, mergers and acquisitions. “It will give them capacity to bear higher risks, avail economies of scale, take higher investment decisions and create more value for the stakeholders,” he had said.
NBCC chairman Anoop Kumar Mittal told ET that his firm is actively looking at opportunities and that each company has its own strengths.
“If we can create a behemoth with specialised verticals we will able to achieve the requisite size and scale to compete with large global firms and aim to look at securing projects especially in Africa and CIS countries,” he said. CIS or Commonwealth of Independent States refers to some of the former Soviet republics that were part of the erstwhile USSR.
The Indian government has been nudging firms to explore synergies in their operations. In the oil sector, Hindustan Petroleum Corp. Ltd (HPCL) may take over two subsidiaries of Oil and Natural Gas Corp. Ltd (ONGC) before the explorer takes over the refiner. The two ONGC units are Mangalore Refinery and Petrochemicals Ltd (MRPL) and ONGC Petro Additions Ltd (OPaL).
Of the record Rs 72,500 crore targeted from disinvestment this financial year, the government has raised about Rs 19,157 crore so far. The government has set a target of Rs 15,000 crore through strategic sales.
The government prepared guidelines last year on the closure of sick and loss-making staterun enterprises and the disposal of their assets, including land. Where land has been leased from the state, it will be returned after accounting for financial compensation, if any.