Decks cleared for BHPV-BHEL merger
Decks have been cleared for the merger of Visakhapatnam-based loss-making public sector undertaking Bharat Heavy Plate and Vessels Limited (BHPV) with state- owned Bharat Heavy Electricals Limited (BHEL), according to Om Prakash, managing director of BHPV.
“We are expecting the merger process will be completed by the end of this fiscal. Once merged, BHPV will get its old glory back within a short span,” Prakash told Business Standard.
The takeover company and the government would clear BHPV’s accumulated losses and loans. Besides, BHPV workshops would be upgraded with huge investments, he stated.
Initially, Delhi-based Engineers India Limited and Hindustan Petroleum Corporation expressed their willingness to take over BHPV but later BHEL evinced interest.
BHPV, which started operations in 1971, earned profits continuously for several years. However, due to lack of sufficient orders and overburdened by staff salaries, the company slipped into the red and has been incurring losses from the last 8 years.
The company’s accumulated losses and loans from financial institutions and government now have crossed more than Rs 600 crore.
This forced the company to gradually trim its staff from about 4,500 to 1,500. On the other hand, the company’s order position showed some improvement for the last two-three years on account of better industrial growth.
At present, BHPV has Rs 400 crore worth of orders on hand, but it is not in a position to complete it on schedule due to lack of working capital. These orders have also not attracted financial institutions because of accumulated losses and old loans.
To overcome this problem, the BHPV management had been seeking working capital support from the government but in vain.
At this stage, the Union government proposed to merge this loss-making company with a profit-making PSU. The state government backed the proposal and also agreed to waive BHPV’s commercial tax dues of about Rs 40 crore.
Union heavy industries minister Santosh Mohan Dev would be visiting Hyderabad in the first week of January to discuss the issue with chief minister Y Rajasekhara Reddy.
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