Oil and Natural Gas Corporation (ONGC) has decided to join hands with Bharat Heavy Electricals Ltd (Bhel) to bid for Engineers India Ltd (EIL).
Though the boards of the two companies are yet to approve the move, it has been informally decided that the consortium will be able to put in an aggressive bid for EIL, which may not be possible if the two state-owned companies bid individually.
ONGC and Bhel officials, who have been having informal discussions on the subject, are of the view that because of the synergies in their operations, the two companies will be able to give a much-needed boost to the engineering consultancy firm. Moreover, the services of EIL will be gainfully employed by both ONGC and Bhel.
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Earlier, it was said ONGC would form a consortium with Indian Oil Corporation (IOC) to put in a bid for EIL.
Larsen and Toubro (L&T) and Gas Authority of India Ltd (Gail) are also understood to be planning a consortium to bid for EIL. Reliance Industries and the Zuari group too are learnt to be in favour of forming a consortium for the purpose. The government plans to sell a 51 per cent equity in EIL, alongwith management control, to a strategic partner. It also plans to offer an additional 10 per cent equity to the employees at one-third the market price or bid price, whichever is lower.
The government holds a 90.4 per cent equity stake in the company, while the public holds a 5.14 per cent stake. Banks and financial institutions hold a 3.14 per cent stake in the company. Post-disinvestment, the government's equity holding in the company is set to come down to 39.40 per cent.
EIL's turnover stood at Rs 787 crore in 2000-01, while its net profit was Rs 123 crore. The authorised and paid-up capital of EIL are Rs 100 crore and Rs 56.16 crore, respectively.