An integrated oil behemoth, big-bang PSU mergers are in pipeline


An integrated oil behemoth, big-bang PSU mergers are in pipeline

The Modi government’s plans to strengthen Central Public Sector Enterprises (CPSEs) through consolidation, mergers, and acquisitions got a huge positive response from the stock market participants.

Recently, it could be seen that after the announcement of the merger of the companies be it from the oil and gas space or from bank space, the stock of these companies rose higher. There is a sense of optimism that government is leaving no stone unturned to rejuvenate the PSU segments.

The government plans to merge 13 government oil companies (to name a few ONGC, IOC, HPCL, BPCL, GAIL, MRPL, Chennai Petroleum, Numaligarh Refinery and Oil India), would not only give these companies capacity to bear higher risks, benefit economies of scale and take higher investment decisions, giving much stronger bargaining power with suppliers, and greater financial clout to secure oil resources.

Moreover, at the same time would create more value for their shareholders and bring much-needed transparency. These conglomerates, post-merger, would be able to compete with domestic private sector oil and gas companies and with international players.

Beside oil and gas companies, the government is considering the merger of half a dozen state-owned consultancy firms, PSU banks, government telecom companies and construction companies, which may compete with global giants. Read More…

Credit By : Economictimes.Indiatimes.com

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