Saturday, October 14, 2017

NBCC to acquire 3 sick PSUs to create construction giant: Report

STATE-run real estate 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 Rs 22,000 crore market cap Navratna PSU and it 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 a daily that the PSU 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. NBCC works under the Ministry of Urban Development is a leader in the construction sector. Its present areas of operations are categorized into three main segments, i.e. (i) Project Management Consultancy (PMC), (ii) Real Estate Development & (iii) EPC Contracting. NBCC has been executing many landmark projects as a PMC which contributes to about 85 percent of its annual revenue. The segment being the Company’s core strength, the areas covered under its umbrella include roads, hospitals and medical colleges, institutions, offices, airports, bridges, industrial and environmental structures etc.
The real estate segment of the PSU which came into being in 1988, mainly executing commercial real estate projects, today has undergone a sea change operation wise. 

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