Millennium Post

PM launches two Bhel plants in Tamil Nadu

Prime Minister Manmohan Singh dedicated Bhel's new plants to the nation at Thirumayan in Tamil Nadu. The company's power plant piping unit, Thirumayam and high pressure boiler plant — unit II, Tiruchirappally, were dedicated to the nation by Singh.

Tamil Nadu governor K Rosaiah,  Union Finance Minister P Chidambaram , Union Heavy Industries and Public Enterprises Minister Praful Patel, DHI secretary S Behuria and Bhel CMD B Prasada Rao were also present on the occasion.

   Meanwhile,  the Disinvestment Department has shelved plans to sell a stake in power equipment maker Bhel, citing valuation
concerns and a depleting order book.

Sources said the department has withdrawn the 5 per cent disinvestment proposal in view of Bhel’s low share price, decreased capital expenditure and less demand for power-sector equipment.

The Bhel share hit a one-year low on the BSE on Monday, declining 19.64 per cent to Rs 120.05, after the company’s June quarter net profit almost halved to Rs 465.43 crore on account of lower sales. The scrip has lost over 60 per cent since 2011, when the stake sale was approved.
‘The power sector itself is not doing well, which has depleted Bhel’s order book. The share price has also been taking a beating and so the DoD decided to withdraw the disinvestment proposal,’ an official said.

The Heavy Industries Ministry, the administrative ministry of the company, has for long opposed the proposed disinvestment
in state-run Bhel, citing unfavourable market conditions. It wanted the issue not to look like a ‘distress sale’ but rather one that wouldreap ‘good value.’

The plan to offload the government’s 5 per cent stake in Bhel through a follow-on public offer was approved by the Cabinet in August 2011. The government holds a 67.72 per cent stake in the Navratna company.However, market conditions led to a delay in the issue and the company in April 2012 withdrew the draft prospectus filed with market regulator Sebi.In the first quarter of the current fiscal, Bhel’s net sales declined 23.7 per cent to Rs 6,352.55 crore from Rs 8,326.24 crore a year earlier, according to a company filing to the BSE on Friday.At the end of the June quarter, the company’s outstanding order book stood at over Rs 1.08 lakh crore, less than over Rs 1.15 lakh crore in the March quarter. Sluggish prospects in the domestic power sector as well as cheap overseas imports of power equipment have adversely affected Bhel’s business.

The government in July 2011 appointed four merchant bankers — Morgan Stanley, DSP Merrill Lynch (Bank of America), ICICI Securities and Kotak Mahindra Capital — to manage Bhel’s follow-on public offer. The government plans to garner Rs 40,000 crore through disinvestment in the current fiscal.
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