India may consider Bharat Heavy Electricals Ltd (Bhel), Mecon Ltd and Andrew Yule and Co. Ltd among candidates for the next round of disinvestment pick, said two people aware of the development, requesting anonymity.
SBI Capital Markets Ltd, the adviser to the proposed stake sale in Bhel, recently submitted its report to the department of investment and public asset management (Dipam) on the plan. This will help the government’s thinking on whether to proceed with the stake sale in India’s largest power equipment maker and the amount of stake that would be sold.
SBI Capital is also advising Dipam on the proposed stake sales in Mecon and Andrew Yule. The department of heavy industry is the nodal ministry for both Bhel and Andrew Yule, while Mecon falls under the steel ministry.
The stake sales in the three companies will bolster the government’s efforts to raise funds via asset sales for the next fiscal and overcome the tepid progress made so far this year. The government hopes to garner ₹1.75 trillion from disinvestment receipts next fiscal. It has been missing its disinvestment targets, and of the ₹2.1 trillion disinvestment goal for this fiscal, it has been able to raise just ₹15,220 crore as on 20 January, with key transactions such as that of Air India Ltd and Bharat Petroleum Corp. Ltd (BPCL) pushed to next year.
Presenting the Union budget, finance minister Nirmala Sitharaman announced details of a new central public sector enterprise (CPSE) policy, paving the way for consolidation of strategic state-run firms and privatization of non-strategic ones. “The policy provides a clear road map for disinvestment in all non-strategic and strategic sectors. We have kept four areas that are strategic where bare minimum CPSEs (central public sector enterprises) will be maintained and the rest privatized. In the remaining sectors, all CPSEs will be privatized,” Sitharaman said in her budget speech. “To fast forward the disinvestment policy, I am asking NITI (Aayog) to work out on the next list of CPSEs that would be taken up for strategic disinvestment,” she said.
A Bhel spokesperson, in an emailed response, said, “As you would be aware, the disinvestment exercise of any PSU is the prerogative of the government. Accordingly, Dipam manages the process as mandated.”
“To the best of our knowledge, there is no information on Bhel’s disinvestment at this juncture,” the spokesperson said.
Queries emailed to the spokespersons of Dipam, ministries of finance and steel, department of heavy industry, Mecon and Andrew Yule last Sunday remained unanswered. A spokesperson for SBI Capital declined to comment.
The Centre holds a 63.17% stake in Bhel, one of the 10 Maharatna CPSEs. The rest is held by financial institutions and banks, insurance firms, foreign holdings and non-institutions.
Bhel accounts for 53% of India’s installed power generation capacity in the conventional space, producing the entire range of power plant equipment ranging from thermal, gas, hydro and nuclear power projects. With 16 manufacturing units and around 33,500 staff, Bhel had orders worth ₹1.1 trillion as of September quarter. In FY20, Bhel reported a loss of ₹1,473 crore.
Andrew Yule is present in diverse businesses such as tea, electrical, engineering, lubricant and printing through three units—Hooghly Printing Co. Ltd, Yule Electricals Ltd and Yule Engineering Ltd. Mecon is present in the metals and mining space and has been working on diversification in sectors such as energy, infrastructure, space and defence.
