Four construction PSUs likely to be merged

Four major construction PSUs, of which two are sick, may be merged to achieve greater synergy between companies like National Buildings Construction Corporation (NBCC) and Hindustan Steelworks Construction (HSCL).

The companies which are being considered for merger are NBCC, Hindustan Prefab (HPL), National Project Construction Corporation (NPCC) and HSCL.

The Board for Reconstruction of Public Sector Enterprises (BRPSE) has constituted a task force to examine different options, which may include project-based consortium for business bids, sources said.

However, there is an opposition to the proposal in two of the cases-NPCC and HPL, they said.

Two sick units, NPCC and HSCL, have been put on the revival package.

NBCC and HPL have positive balance sheets with net worth of Rs 637 crore and Rs 10.09 crore, respectively.

NBCC, which achieved a profit of Rs 118 crore on a turnover of Rs 3,115 crore in 2010-11, would like to go in for a joint venture route with other PSUs like HPL and HSCL, instead of outright merger.

The proposal for merger was discussed at the meeting of the BRPSE in June where the reconstruction board felt that "all these companies in one way or other are engaged in construction activities and possess synergies. A combined entity by way of merger may create a giant company and are capable of becoming a navratna firm".

However, in case of NPCC, the administrative ministry of water resources said though the proposal of merger is to be examined, it would not like it as the ministry wanted the NPCC to regain the original stature in civil construction.

Also, it would lead to personnel adjustment problems, sources said.

Besides, HPL informed the board about its plan to start prefab steel and concrete through a joint venture withSAIL. Therefore, it showed unwillingness for merger, they added.

During 2009-10, NPCC net worth stood negative at Rs 118.75 crore as on March 31, 2010 due to accumulated losses of Rs 795.48 crore. It registered a profit of Rs 31.29 crore on the turnover of Rs 1,003 crore in 2009-10.

HPL turnover was Rs 162.42 crore and profit after tax stood at Rs 2.47 crore, while HSCL turnover was Rs 800 crore and net loss was Rs 59.5 crore, in 2009-10.