In order to herald efficiency in the best way of functioning of public sector undertakings, the government is taking the merger routs. The Cabinet has accepted the merger of SBI with its five associates, all state-owned oil corporations will become one, and now, the government’s six consultancy companies will merge into Engineers India Ltd to create a mega-consultancy firm.
The merger of consultancy companies reminiscent of MECON, Telecommunications Consultants India (Ltd), Engineering Initiatives (India), WAPCOS, and many others has been proposed within the Union Price range 2017. The concept behind creating a big entity is to take on competitors worldwide and set up India’s footprint in the global enterprise of challenge consultancy.
Merger rationale and advantages
There are almost a dozen state-owned corporations that provide a spread of consultancy companies and there is a scope of merging some of them to create a big company that can compete globally and put India on the worldwide map of doing flip-key projects. At current, Engineers India Ltd (EIL) is the most important state-owned consultancy agency within the country which provides flip-key engineering options to tasks in India and abroad and Engineering Tasks (India) gives turnkey execution of tasks within the infrastructure space.
Then there are specialized consultancy firms like Telecommunications Consultants (India) Ltd which does related work within the telecom business at house and abroad. The truth is, the company has spearheaded a bunch of initiatives in Africa. Similarly, WAPCOS provides consultancy in water, power and infrastructure associated projects. MECON offers technical consultancy and undertaking implementation companies in the infrastructure sector.
The merger of consultancy firms will allow the brand new firm to bid and take initiatives throughout industries and even compete will global consultancy giants like Bechtel and home companies like Larsen & Toubro and ABB. Merger of consultancies might help them integrate across the value chain of an industry. It also offers them the opportunity and capability to take risks and discover new business, avail economies of scale, take higher investment selections and create more worth for stakeholders. An even bigger merged entity will help to diversify in enterprise and usher in operational efficiency.
The merger of state-owned firms will cut back inefficiencies across the sector and create an entity that will probably be better placed to compete globally. It will have all the assets – financial, manpower, technical capabilities to bargain and bid for initiatives internationally and herald value for shareholders.
The government’s imaginative and prescient is that the merged entity or an even bigger EIL will be capable of take on world consultancy agency Bechtel, which is some of the revered global engineering, development, and project management corporations. Established in 1898, Bechtel has executed over 25,000 tasks across 160 countries on all seven continents. It operates in infrastructure, nuclear, security and environmental, oil, fuel and chemicals, mining and metals.
About Engineers India Ltd (EIL)
Established in 1965, state-owned EIL is an engineering consultancy company which provides design, engineering, procurement, building and integrated venture management services. It provides providers mainly in oil, gas and petrochemical industries and has additionally diversified into sectors like infrastructure, water and waste administration, solar and nuclear energy and fertilizers to leverage its robust technical competencies and observe record. The company’s corporate office is in New Delhi and has four regional engineering places of work in Mumbai, Kolkata, Chennai and Vadodara. The corporate has an overseas office in Abu Dhabi, which caters to the enterprise wants in UAE/Center-East region. It additionally has offices in London, Milan, and Shanghai to coordinate the activities of worldwide procurement and advertising.
EIL has two subsidiaries — Certification Engineers Worldwide Restricted (CEIL), offers providers in the sector of certification, re-certification and third-social gathering inspection services. The second subsidiary EIL Asia Pacific Sdn. Bhd. (EILAP), Malaysia is engaged within the enterprise of offering technical services for projects in oil and gasoline and different industrial sectors. The corporate additionally had three strategic Joint Ventures. The TEIL Projects Limited with Tata Tasks Limited pursues tasks in oil and fuel, fertilizers, steel, railways, energy, infrastructure and many others. Secondly, Ramagundam Fertilizers and Chemicals Limited with National Fertilizers Restricted (NFL) and Fertilizer Corporation of India (FCIL) and Jabal EILIOT Co Ltd, with Jabal Dhahran of Saudi Arabia and IOTL to pursue business alternatives in hydrocarbon and infrastructure sector in Kingdom of Saudi Arabia. Some of the notable projects executed by EIL are world’s longest deck on single jacket for SHG Platform of ONGC, Jamnagar-Loni Pipeline of GAIL, one among the biggest LPG pipelines on the planet and 9 MMTPA Guru Gobind Singh Refinery of HMEL.
For the quarter ended December 2016, the corporate has reported standalone sales of Rs 325 crore, down -4.1% from the quarter ended September 2016. On a 12 months-on-year basis, sales have been down 11.Eight%. The company reported internet profit after tax of Rs 85 crore within the quarter ended December 2016.
It offers companies in technical consultancy in design, engineering, and venture implementation from idea to commissioning for industrial growth in infrastructure and different service sectors. Established in 1959, MECON Limited was earlier referred to as Metallurgical & Engineering Consultants (India) Limited. It’s a state-owned company underneath the Ministry of Steel of the government of India. The truth is, the company began operations in 1959 as the Central Engineering and Designing Bureau (CEDB) of the Hindustan Steel Limited (HSL), the primary public sector steel firm.
After that CEDB grew as Metallurgical and Engineering Advisor (MECON), a subsidiary of the Steel Authority of India Limited (SAIL) in 1973. It later turned an autonomous firm reporting to the Ministry of Steel in 1978. It offers companies in energy, power & surroundings, infrastructure, oil & fuel, metallurgy and different specialized areas and is the first engineering consultancy group in India to be accredited with the ISO 9001 certification.
About Telecommunications Consultants India Ltd (TCIL)
Telecommunications Consultants India Ltd is a state-owned company established in 1978 beneath the administrative control of Department of Telecommunications, Ministry of Communications. It is a notable telecommunication consultancy and engineering company and has made its huge and varied telecom expertise to many growing nations. It has prolonged its telecom consultancy and turnkey projects execution companies to telecom operators, bulk users and others in India and eighty different countries within the Middle East, Africa, South & South East Asia. The success story of TCIL lies in its high quality management and excellence in mission execution.
The company’s natural and inorganic growth has led to multiply its standalone in addition to group turnover manifold. In many nations, it has taken up initiatives in fields of telecommunications and information know-how and is deploying new technologies in the sphere of Telecom Software program, Switching and Transmission Techniques, Cellular Companies, Rural Telecommunications, Optical Fiber primarily based Backbone Transmission Techniques and many others. TCIL has diversified its operation and has been executing turnkey projects of energy transmission, rural roads, and civil development.
It is a consultancy and engineering, procurement & construction (EPC) company which provides built-in and customised solutions for sustainable development of water, power and infrastructure tasks in India and abroad. Incorporated in 1969, it’s a Mini Ratna firm under the aegis of the Union Ministry of Water Resource. It is a techno-commercial organization, which utilises the talent and experience developed in the varied organizations of government of India and state governments.
The state-owned company achieved highest ever profitability of Rs 129.19 crore and secured new business of Rs 1,747.Forty six crore within the financial year 2015-sixteen. It had paid a dividend of Rs 25.25 crore for 2015-sixteen to the government. That is the very best ever since its inception. The company declared a composite rating of one hundred, which is the best achievable rating as per the MoU analysis system of the ministry of heavy industries and public enterprises.
While the government’s intent to merge the six consultancy firms into Engineers India Ltd is laudable, it will face stiff resistance from the Union. The federal government ought to stay clear of any roadblocks and go ahead with the plan to chop price and herald operational efficiencies in the long-run.