PDIL may take merger route instead of stake sale

Ministry of Chemicals and Fertilisers plans to move a Cabinet note to merge the entity with EIL

The Cabinet Committee on Economic Affairs (CCEA) is set to undo its decision to sell Projects and Development India (PDIL) to a strategic investor. Instead, it is likely to approve the merger of PDIL with Engineers India (EIL).

The ministry of chemicals and fertilisers, the nodal ministry for PDIL, plans to move a Cabinet note to merge the entity with EIL. Sources close to the development told Business Standard that a meeting was held recently in this regard. 

A source said, “There is a feeling that both the entities are into the same businesses and it would be beneficial to merge them instead of divesting the stake.” 

EIL is a public sector undertaking that falls under the ministry of petroleum and natural gas. It is one of the Navaratna public sector undertakings (PSUs). Earlier, employees of PDIL had made representations to the nodal ministry and suggested that the company be merged with EIL.

The government had initiated the divestment process of PDIL after the CCEA had approved selling its stake to a strategic investor. Valuations have been sought. The government had earlier tried to merge PDIL with another PSU, Hindustan Prefab.

PDIL is a design engineering and consultancy organisation focusing on sectors such as fertilisers, allied chemical industries and oil and gas. Its areas of expertise include product pipelines, liquefied petroleum gas (LPG) terminals, oil terminals, LPG bottling plants, LPG mounded storages, methanol plants, hydrogen plants and various acid plants.

EIL is an engineering consultancy service provider to the refinery sector. It has executed 72 refinery projects with a combined refining capacity of over 100 mmtpa, including 10 grassroots refineries. Its services range from concept to commissioning of projects, including single unit revamp projects, mega refineries and refinery-cum-petrochemical complexes. 

The government has not met its disinvestment target for the past seven years. In Budget 2017-18, it set a disinvestment target of Rs 72,500 crore — which involves Rs 46,500 crore via minority stake sale, Rs 15,000 crore through strategic stake sale and Rs 11,000 crore from listing of various insurance companies.

So far, the government had mopped up close to Rs 10,000 crore from disinvestment.