The government also plans to dilute its equity in power equipment manufacturing entity to 26 per cent in phases under the plan unveiled in last years budget
New Delhi: State-owned Bharat Heavy Electricals Ltd (BHEL) may sell four to five units of its non-core manufacturing business under government’s asset monetisation process during the ongoing financial year.
The government also plans to dilute its equity in power equipment manufacturing entity to 26 per cent in phases under the plan unveiled in last years budget.
According to official sources, out of the total 16 manufacturing units of the company, few units which do not have material synergies with its core business, such as transportation and water may be put to sale.
Alternatively, some of the idle factories will also be offered to foreign companies looking for manufacturing opportunities in India but are finding difficult to find suitable land for their ventures.
In this regard (partnership with foreign companies), BHEL has invited expression of interest from foreign companies willing to use its manufacturing facilities. It is looking for partnerships in the areas of manufacturing The possible areas where Bhel is looking for partnership include electrical and transportation equipment, solar modules, silicon chips, lithium-ion cells and LCD panels, sources privy to the development said.
“…this could be a win-win situation for both the foreign company and BHEL. The partnership can shorten the time to set up manufacturing facility for the incoming partner while also helping BHEL utilize its idle factories and employees. With power sector demand still struggling, this is a significant diversification move,” brokerage Emkay said in its report on the PSU.
Apart from monetising it’s factories, BHEL may also offer its 14,000-acre land bank available in major cities for the development of industrial clusters and setting up manufacturing facilities, hospitals and smart cities.
Asset monetisation of public sector enterprises has been in the government’s agenda for some time now given the fiscal pressure the Centre is in and the companies too are going through a rough financial phase. The sale of the non-core units of BHEL is among the government’s plan to monetise its stake in public sector units (PSU).
The businesses of the ‘Maharatna’ company include power, transmission, transportation, renewable energy, water, defence and aerospace, industrial products and systems, and energy storage solutions.
BHEL’s transportation business deals in manufactures locomotives, metro coaches, electric rolling stock, electrics for urban transportation system and railway track electrification. In its water resources segment, the company provideds turnkey solutions for power plants, industries and municipal segments and manufactures pre-treatment plant, sea water reverse osmosis and demineralization plant, effluent treatment plant, sewage treatment among others.
BHEL, a Maharatna CPSE under the Department of Heavy Industries, has 16 manufacturing facilities spread across the country with substantial land bank as well as extensive built up industrial/ commercial and residential spaces. It’s manpower strength of about 34,000 includes 9,000 engineers.
With power demand slowing down, BHEL wants to utilise the opportunity emerging from the coronavirus aftermath, where global firms are looking to decentralise operations to reduce risk and reduce cost.
At the end of September 2019, BHEL’s order book declined 8 per cent y-o-y to Rs 1.1 lakh crore. Due to the lockdown to contain the outspread of the coronavirus, some large orders, which BHEL was looking forward to have, also been postponed.