Cabinet okay for BHEL divestment next week

The Union Cabinet is likely to approve disinvestment of five per cent of the government's equity in state-run equipment company Bharat Heavy Electricals Ltd next week.

This is part of the government's plan to raise Rs 40,000 crore (Rs 400 billion) from disinvestment in the current financial year.

"The Cabinet note has already been moved.

"The approval is likely to come by next week," a person close to the development said.

The divestment of BHEL is expected to raise about Rs 4,500 crore (Rs 45 billion) and the government's stake would then reduce to 62.72 per cent from the current 67.72 per cent.

BHEL's board of directors had recommended the five per cent disinvestment in May. About 10 per cent of the equity to be offloaded is to be reserved for employees.

BHEL had also announced splitting of stocks of the face value of Rs 10 into five shares having a value of Rs 2

each.

In the current financial year, starting April 1, the government has raised Rs 1,162 crore (Rs 11.62 billion) through divestment, of a five per cent stake in Power Finance Corporation in May.

Initially, BHEL was not originally part of the government's list for disinvestment in this year.

Oil and Natural Gas Corporation, Steel Authority of India Ltd, Hindustan Copper, Rashtriya Ispat Nigam Ltd and National Buildings Construction Corp are to also see divestment by the government in 2011-12.

In 2010-11, the government had raised Rs 22,400 crore (Rs 224 billion) through divestment in Coal India, SJVNL, Power Grid, Engineers India, MOIL and Shipping Corporation of India.

For the year ended March 31, 2011, BHEL had recorded an increase of about 40 per cent in consolidated net profit, at Rs 6,053 crore (Rs 60.53 billion).

The consolidated income grew 26 per cent to Rs 43,679 crore (Rs 436.79 billion) in 2010-11.