The government is considering merging about half a dozen state-owned consultancy firms with Engineers India Ltd (EIL) to save costs and improve operational efficiency.
Union Finance Minister Arun Jaitley had said in his Budget speech that through mergers and acquisitions, central public sector enterprises (CPSEs) can be integrated across the value chain of an industry.
"It will give them the capacity to bear higher risks, avail economies of scale, take higher investment decisions and create more value for the stakeholders," Jaitley had said on February 1.
About a dozen PSUs provide a range of consultancy services— from education to engineering, procurement, construction (EPC). While Engineers India is the biggest state-run consultancy firm providing engineering consultancy and EPC services, focused mainly on the oil and gas and petrochemical industries, Engineering Projects (India) Ltd also provides turnkey execution of projects in the infrastructure space.
Similarly, MECON Ltd provides technical consultancy and project implementation in infrastructure and services sector, while in the telecom space, there is Telecommunications Consultants (India Ltd) whereas WAPCOS ensures consultancy and EPC for water, power and infra projects.
"There is a scope of merging some of them to create a company of global standards," a senior government official told PTI.
The official said the merged entity can also diversify into sectors not touched so far and the consolidation would give the new entity much stronger bargaining power for projects. Simultaneously, it can compete with the likes of Bechtel of the US and domestic majors like Larsen & Toubro (L&T).
Reacting to the news, shares of Engineers India surged about four per cent to Rs 156.50 on the BSE.