The Telegraph
Since 1st March, 1999
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Bhel stake sale heads for market

New Delhi, May 26: The cabinet committee on economic affairs (CCEA) today decided to offload a 10 per cent stake in state-run power equipment maker Bharat Heavy Electricals through a market offering.

The proposed sale, the first divestment this fiscal by the Congress-led government and the second since it was elected last year, wasimmediately opposed by the Left.

While CPI leader Gurudas Dasgupta wrote to the Prime Minister saying there was no justification for the sale, the CPM issued a strongly worded statement asking the government to reconsider the selloff. CPI leader D. Raja said, “Why should we go for such reckless divestment' We oppose it.”

The ruling coalition has been slow on the sale of public sector companies because of opposition from its main allies ' the four Left parties. Finance minister P. Chidambaram who announced the divestment, however, said he would “try to convince Left leaders on this issue.”

Interestingly, the selloff decision comes at a time when the government is planning a cap of Rs 100 crore on tender sizes of state-run units where other PSUs will be given a price preference. Such a cap could hit Bhel badly as it depends largely on tenders floated by the Centre and state-run power generation firms.

Chidambaram added that the government has decided to split the Bhel stock in a bid to attract greater retail participation. The government hopes to garner about Rs 2,000 crore from this sale.

The public offer will be a book-built one and 15 per cent of the issue will be reserved for employees. The proposed market offering will bring the government equity in the firm down to around 57.7 per cent, officials said.

News of the planned sale had a positive impact on the stock market. Shares of Bhel jumped 3.2 per cent in a heady Dalal Street session.

The money from the selloff will be parked in the newly set-up national investment fund, the finance minister said. Up to 75 per cent of the fund will be used for expenditure on social sectors like health, while 25 per cent will be earmarked for revival of sick PSUs.

This year, the government also hopes to sell rump holdings in aluminium major Balco and automaker Maruti Udyog, besides stake sales in PowerGrid and Oil India.

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