FY2017 has been a year of overhauling for the public sector enterprises. Restructuring of the organizations, rush of disinvestment, stake sale to private owners, mergers and acquisitions and a string of public sector IPOs have crowded this year's timeline. Stepping up their role as the Indian economy’s backbone, the public sector units (PSU) are strongly looking to expand their operations while filling the government treasury through disinvestment or listings on the stock exchange.
The sector saw a slew of major initial public offerings (IPO) including Mahanagar Gas, PNB Housing Finance, HUDCO, SBI Life Insurance, Cochin Shipyard and General Insurance Corp. of India. More PSUs are lined-up to be listed in the upcoming quarters. The government is set to become the biggest fundraiser in the IPO market in the current financial year and is expected to raise about Rs. 18,000 crore through IPOs, summing up to a fourth of the government’s target of raising around Rs. 72,000 crore through disinvestment in the current fiscal.
The objective of government reforms in the PSUs is to create integrated giant organizations and to incorporate competitiveness in the enterprises. Vertical integration and IPOs of the PSUs provide them greater capacity to bear higher risks, make larger investment decisions and negate the impact of global price volatility. Further, the amalgamations in the sector will largely reap the benefit of economies of scale, help in specialized research and development and optimize operational costs, among others. Some of the major mergers and acquisitions in the sector include the acquisition of HPCL by ONGC and merger of associate banks with State Bank of India.