The government will divest five per cent equity in state-run Bharat Heavy Electricals Ltd (BHEL) as part of its plan to raise Rs 40,000 crore from disinvestment in the current financial year. The company's board today approved the proposal.
The department of disinvestment is now expected to seek a Cabinet approval.
The government currently holds 67.7 per cent equity in BHEL, which will come down to 62.7 per cent following the disinvestment. "The board of directors of the company has recommended the disinvestment of five per cent of the paid-up equity of BHEL out of the government of India's shareholding," BHEL said in a filing to the Bombay Stock Exchange.
During the current financial year, the government has already raised Rs 1,162 crore through the divestment of five per cent stake in Power Finance Corporation in May. A follow-on public offer by SAIL is likely to hit the market next month and another issue by ONGC in July. According to the current valuation, the government is expected to raise Rs 4,500 crore from disinvestment in BHEL.
Ten per cent of the equity to be offloaded under the disinvestment programme would be reserved for employees. BHEL also recorded an increase of about 40 per cent in its consolidated net profit at Rs 6,053.4 crore for the year ended March 2011. The consolidated income grew over 26 per cent to Rs 43,678.6 crore in 2010-11.
It posted a 46 per cent rise in net profit for the quarter ended March, at Rs 2,798.04 crore. During the same period last year, its profit stood at Rs 1,909.6 crore.
The company also recommended 179 per cent dividend, amounting to Rs 17.9 per share for 2010-11. This would be in addition to interim dividend of Rs 13.25 per share.
BHEL has also announced splitting of stocks of face value Rs 10 into five shares having a value of Rs 2 each. The company’s shares were down 6.6 per cent at Rs 1935.6.
