State-owned BHEL, which reported an annual net profit of profit at Rs 6,868 crore for the financial year ended March 2012, on Tuesday said it has withdrawn the initial papers for the follow-on offer filed with Securities and Exchange Board of India (SEBI), following an instruction by the Finance Ministry.
“We received instructions from the Department of Disinvestment that the DRHP (draft red herring prospectus) has to be withdrawn…,” CMD BHEL B P Rao told reporters while announcing the company’s annual results which jumped 14 percent.
The company did not give details about the decision.
However, analysts feel that the move may have been influenced by the lack of enthusiasm among investors for PSU shares.
Rao said as long as DRHP was with the SEBI, the company had to observe a ‘silence period’.
The decision follows approval from Board of Directors of the company and “no-objection” from the Department of Heavy Industry and Department of Disinvestment, he said.
The company filed the DRHP in September last year for the follow-on public offer that will see the government offloading five percent stake in the company.
The sale of government’s five percent stake in the power equipment maker is expected to fetch over Rs 4,000 crore.
The government in July, 2011 appointed four merchant bankers — Morgan Stanley, DSP Merrill Lynch (Bank of America), ICICI Securities and Kotak Mahindra Capital – for BHEL’s follow-on public offer.
The government on August 30, 2011 approved the disinvestment of five percent of its shareholding in BHEL. The government holds 67.72 percent stake in the entity.
Meanwhile, the government managed to garner Rs 12,000 crore through sale of its five percent stake in ONGC through an auction, to partly meet the disinvestment target of 2011-12.
The government had set a target of earning Rs 40,000 crore through stake sale in the PSUs in 2011-12, of which Rs 2,000 crore were raised by the Power Finance Corp’s FPO in May and Rs 12,000 crore from stake sale in ONGC among others.
It plans to sell equity in companies like SAIL, Neyveli Lignite, Nalco and Oil India to mop up Rs 30,000 crore during the current fiscal. The government has enough time to launch the public issues as the year has just begun.
Shares of the company closed at Rs 264.20, up 1.50 percent on the BSE.
Meanwhile, helped by improved operational efficiency, the company posted 14 percent jump in net profit at Rs 6,868 crore for the financial year ended March 2012.
It had a net profit of Rs 6,011 crore in 2010-11.
However, the state-owned power equipment major’s order book fell to Rs 22,096 crore last fiscal, as against Rs 60,000 crore in 2010-11 because of sluggishness in the sector.
BHEL’s turnover, meanwhile, rose nearly 14 percent to Rs 49,301 crore in 2011-12 period, as compared to Rs 43,337 crore in 2010-11.
“We optimised our designs and improved our supply chain, among others. There was better operational efficiency (in last fiscal). Also, sheer volumes (of equipment delivered) helped in higher profit,” Bhel Chairman and Managing Director B Prasada Rao told reporters here.
In 2011-12, the entity is estimated to have seen orders for about 3,000 MW equipment.
The power sector in India witnessed a sharp slowdown during 2011-12 due to many issues including coal allocation and environmental clearance, Rao noted.
At the end of 2011-12 fiscal, Bhel had cumulative orders worth Rs 1,34,681 crore.
Expressing optimism that power sector has good potential, Rao said the company expects to see orders of about 15,000 to 16,000 MW in the current fiscal.
“We expect to get 7,000 to 8,000 MW equipment orders in the first quarter (of current fiscal) itself,” he added.
BHEL anticipates increasing its annual turnover to about Rs 50,000 crore this fiscal.
On future plans, Rao said the company would focus more on oil and gas, transportation and defence sectors.
The entity had cash reserves of Rs 6,800 crore at the end of March 2012 and the money would be mainly utilised for operational activities and capital investments.
Rao said that “unforeseen turmoil in various parts of the globe” impacted the company’s international business prospects especially in the Middle East & North Region.
BHELhas presence in many countries and 7-8 percent of total revenues are from exports.
PTI