The Narendra Modi government is exploring opportunities for further mergers and acquisitions (M&As) among state-owned companies this year, Dipam Secretary Atanu Chakraborty told Business Standard on Saturday.
In some cases, if the need arises, the Centre will restructure public sector undertakings (PSUs) and hive off their divisions, Chakraborty said.
Dipam stands for Department of Investment and Public Asset Management.
“Integration as a strategy will always continue for state-owned companies because we want them to benefit from economies of scale. We are looking at energy, and oil and gas. In some cases, the idea is to improve the value chain, and that could mean demergers. Somewhere if it is not adding to economies of scale, we can look at demerger,” Chakraborty said when asked if the Centre would go for more M&As among PSUs in 2019-20.
However, Chakraborty declined to take any names. In the power sector, the government is keen that NTPC acquire SJVN. In the oil and gas sector, on the top agenda is the bifurcation of GAIL (India) into units for marketing and transportation, with one of them to be sold. In the past two years, there have been many acquisitions in the power, oil and gas, and infrastructure space among PSUs. Those in infrastructure have been relatively small.
In 2017-18, ONGC acquired the Centre’s 51 per cent stake in Hindustan Petroleum for Rs 36,900 crore, and helped Dipam garner a record Rs 1 trillion in divestment proceeds. In 2018-19, Power Finance Corp acquired the Centre’s 52.63 per cent stake in Rural Electrification Corp for Rs 14,500 crore.
In her Budget speech on Friday, Finance Minister Nirmala Sitharaman said strategic disinvestment of select central PSUs would remain priority for this government. “In view of current macro-economic parameters, the government would not only reinitiate the process of strategic disinvestment of Air India, but would offer more CPSEs for strategic participation by the private sector,” she said.
When asked for details, Chakraborty said: “There is work going on for many companies. You can expect the expression of interest for Pawan Hans next week. EoIs for Engineering Projects India and Project Development India will also be out very soon. There are three plants of SAIL Ltd which we plan to sell. We are working on making those offers more attractive to investors.”
“Even in the case of companies last year where bids failed, we saw a lot of initial interest. The process took very long. We will aim to shorten it. Our aim is to finish a privatisation process in four-six months. We want to move fast,” he said.