"Many companies are getting out of their non-core activities by selling their non-profitable assets, hiving off their loss making divisions and reducing non economical joint ventures," it said.

According to the RBI report, there were 66 open offer documents filed with the Securities & Exchange Board of India during 1998-99 as against 37 open offers in the previous year.

"M&A activity was witnessed in industrial sectors like cement, steel, computer software, finance, pharmaceuticals, consumer durables, food products, agro chemicals and textiles," it said.

According to the report, take-over bids by creeping acquisitions and assetbought-outs and mergers within the group companies to consolidate business activity were on the rise.

Major restructuring is reflected in growing number of mergers and acquisitions. The diversification of industrial units, increase in technical collaborations and greater professionalism in corporate managements is evident. "It is expected that it will gain momentum as competitive pressure in the real sector is building up as manufacturing units have started taking initiatives to intensify research and development efforts," it said.

According to the report, there has been some turnaround with the index for industrial production registering an increase of 5.6 per cent as compared with 4.5 per cent in the corresponding period of 1998-99. "This is mainly due to upsurge in manufacturing sector production. The capital goods sector has posted impressive gains although the base is still narrow," it said.

As per the report, a notable feature of the dynamics of the structural transformation of the economy inrecent years has been the rising contribution of the service sector which includes substantial value-added and skill-intensive services like software.