Tuesday, February 6, 2007

BHEL, HPCL, Engineers India in race to buy sick PSU Bharat Heavy Plate and Vessels

Underperforming public sector EPC firm Bharat Heavy Plate and Vessels Limited (BHPV) has been put up for sale by its parent company, the state-owned Bharat Yantra Nigam Limited (BYNL). Bharat Heavy Electricals Limited (BHEL), Engineers India Limited (EIL) and Hindustan Petroleum Corporation Limited (HPCL) are in the race to acquire it, with BHEL I the lead. SBI Caps has already conducted the due diligence.

BHPV requires an infusion of Rs. 1000 crores for its revival package. As per the estimates made by EIL and BHEL, investments of Rs. 300 crores would be required for replacing the existing machinery which is around 30 years old. Both companies propose additional machines for new product lines having market potential in oil and gas and power industries. Besides investment in equipment, there will be requirement of over Rs. 100 crores for the working capital needs. BHPV also seeks financial restructuring to clean its balance sheet with waiver of loans and other statutory liabilities that have accrued till date.

The firm is expected to close the current fiscal with a turnover of Rs. 175 crores; its order book position is worth over Rs. 400 crores. The company also has excess land measuring 377.7 acres, which may be disposed of to secure additional funds.

The Ministry of Heavy Industries and Public Enterprise has invited EIL, BHEL and HPCL seeking an Expression of Interest (EoI) for acquiring BHPV. It has been proposed that EIL will provide engineering, inspection, marketing and managerial support. HPCL has been considered for partnering this venture for managerial support and securing orders for the ongoing projects of BHPV. However, BHEL with experience in handling labour, running industrial enterprise, capability to provide technology, besides securing orders from the power industry was considered as an ideal partner in the venture.

Read The Economic Times article.

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