By Cherian Thomas, Bloomberg
MUMBAI: India’s state-run companies should look for opportunities to merge, buy new companies and build create new joint ventures to create shareholder value and cut costs, Prime Minister Manmohan Singh said.
“In the increasingly globalized world they operate in, they must learn from the private sector and seize opportunities for mergers,” Singh told the chiefs of state-run companies in New Delhi on 7 March. “This should be an integral part of their business strategy.”
India has ended public sector monopolies in almost all areas of business, allowing Posco, the world’s third-largest steelmaker, and Reliance Industries Ltd, which owns the world’s third-biggest refinery, to compete with state-run Indian Oil Corp. and Steel Authority of India Ltd. The share of India’s 250 state-run companies, controlled by the federal government, has shrunk by more than half to 27% of India’s industrial production in the 60 years of the country’s independence.
Only 44 state companies are listed on the stock exchange.
“It may be useful for more public enterprises to be listed on the stock exchange,” Singh said. “This would enhance and professionalize the board of directors. Induction of independent directors on the boards of public sector enterprises would ensure greater efficiency and effectiveness in decision making.”