Mazagon Dock, Goa Shipyard may merge
The central government is considering mergers of a few state-owned companies in the defence sector. The first among these could be of Mazagon Dock Shipbuilders (MDS) and the smaller Goa Shipyard Ltd (GSL).
The idea, say senior government sources, is to ensure more attractive valuation for investors as the Centre prepares for listing of MDS. The Centre owns 100 per cent stake in both companies.
“They have a similar profile and their facilities are relatively close to each other in geographical terms. A merger is being considered and might happen before the MDS listing,” said an official.
MDS, with revenue of ~4,900 crore for 2015-16, builds various classes of destroyers, frigates, corvettes, submarines and coast guard vessels. GSL, with revenue of ~786 crore for 2015-16, makes offshore patrol vessels, minehunters, and landing ships.
The finance ministry’s department of investment and public asset management has issued a formal Request for Proposal for legal advisors and lead managers for listing of a number of public sector undertakings (PSUs) under the defence ministry. These include Bharat Dynamics, Garden Reach Shipbuilders, MDS and Mishra Dhatu Nigam.
The only manufacturer of military aircraft, Hindustan Aeronautics, is also expected to make its market debut this year. So will Cochin Shipyard, which is under the shipping ministry but also makes warships.
The government has planned a number of mergers and acquisitions (M&A) in the PSU space. In his 2017-18 Union Budget speech, Finance Minister Arun Jaitley said there were “opportunities to strengthen” PSUs through consolidation or M&A. He gave the example of the oil and gas sector. “We propose to create an integrated public sector oil major, which will be able to match the performance of international and domestic private sector oil and gas companies.”
State-owned and listed construction company NBCC bought Hindustan Steelworks Construction as a subsidiary earlier this month. There are also plans to merge smaller PSUs in the construction space, such as Hindustan Prefab, Engineering Projects India, NPCC and HSCC, into the larger NBCC.