Public sector undertakings will not follow a herd mentality on mergers, said Tuhin Kanta Pandey, secretary, Department of Investment and Public Asset Management (DIPAM), when asked about the possibility of CPSE mergers to improve efficiency.
“Mergers are in my opinion overhyped. The literature is still not very clear that the mergers have improved technical efficiencies,” he told Moneycontrol in an interview noting that public sector enterprises need to be assessed differently.
The government had announced merger of 10 nationalised lenders into four large banks in 2019.
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Pandey noted that while in the case of public sector banks, technology was primary consideration for mergers, CPSEs will need to be assessed from HR concerns that can arise from mergers.
“Our systems are not so standardised. In many cases there will be insurmountable problems, there will be fitment issues,” he noted.
The secretary noted that this did not mean that PSUs were not concentrated on value creation.
DIPAM has become more focused on asset management and has a more market-oriented approach, he pointed out.
On the issue of strategic divestment, the secretary noted that the department will go for disinvestment wherever cabinet clearances are available but will also focus on value.
“We have to really see whether it is also worth doing going forward. Pawan Hans didn't succeed, even in its fourth iteration, owing to some legal issues. In many cases, like Scooters India Limited, we tried but we couldn’t find buyers and then had to go for closure,” Pandey added.
The government junked the plan of Pawan Hans’ sale in 2023.
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