The government is considering divesting up to 51 per cent equity in public sector equipment major Bharat Heavy Electricals Ltd (Bhel).
Sources said the heavy industry ministry_ the administrative ministry for Bhel _ has recommended 49 per cent divestment in the company. However, the divestment department is considering the option of privatising Bhel by divesting up to 51 per cent.
The sources acknowledged that a majority sale in Bhel would have more political implications than the privatisation of government companies like Indian Airlines or Air-India, since Bhel is financially strong and has strategic importance as India's major heavy equipment supplier.
Bhel is a debt-free company and had total paid-up capital of
Rs 245 crore and net profit of Rs 544 crore last year. It paid a dividend of Rs 60 crore last year.
Sources said some of the critical issues being discussed were whether to divest to a strategic investor or to financial institutions.
They added that the administrative ministry has indicated that it is not in favour of the government selling a majority stake in the company.
The government had earlier divested about 32 per cent in Bhel in four tranches, with the bulk of the sale being to financial institutions.
The first round of divestment was made in December 1991, whereby the government sold 20 per cent of its equity to financial institutions. This was followed by a divestment of 0.46 per cent in August 1993, again to FIs.
The third round of divestment took place in March 1994, when the government divested 0.82 per cent to Bhel employees, although against the initial plan to divest up to 5 per cent towards the employees.
The government again divested 11 per cent equity in March 1994 towards financial institutions__thereby taking the total divestment from BHEL to 32.28 per cent over a span of four years.
According to sources ,the share price during the first round of divestment was Rs 38 per share, while the divestment towards the employees was done at a share price of Rs 62 per share. At the moment the share price of the company is hovering at around Rs 150 and closed yesterday at Rs 143.55
Selloff Saga
Bhel shareholding structure
FIs 31.46%
Employees 0.82%
Government 67.72%
December 1991 20% equity sold to FIs
August 1993 0.46% sold to FIs
March 1994 0.82% divested to employees
March 1994 11% sold to FIs
