Sitting on a huge cash surplus of over Rs 9,000 crore, state—owned power equipment make BHEL is keen to invest in a joint venture by picking up equity in state power projects, a move that would generate revenues and also additional business for the PSU.
“...We are putting this money in joint ventures offering state generation companies equity in their power plants. It is a better way to invest money and generate business for the company,” BHEL CMD, Mr B P Rao, said here on Sunday.
The company has already entered into four such joint ventures with states of Maharashtra, Madhya Pradesh, Karnataka and Tamil Nadu, he said, adding that BHEL would be investing about Rs 3,000 crore in these JVs over a period of four years depending upon the schedule of projects.
These power plants could be coal—based or gas—based and as they get the linkage to the raw material the projects would take off.
By doing so, BHEL would pick up to 25 per cent equity and this would ensure business for equipments. The state generation firms would contribute the remaining 75 per cent equity.
BHEL would also keep it optional to exit from the joint venture after 5—6 years of commissioning of the projects by roping in a third partner, Mr Rao said, adding that this would be an option as the PSU may also decide to continue with the project.
“Ultimately we would like to exit the company as we don’t want to compete with our customers,” he added.
Asked whether BHEL was also keen on overseas acquisitions, he said, “We are looking at opportunities that can give us new market access, opportunities that can give us new technologies, strategic inputs like raw material....these are the three dimensions we are looking at.”
BHEL has appointed a team, which would evaluate the opportunities available for the company abroad and would advice on the same. It comprises consultants such as Kotak Mahindra, Merrill Lynch, Ernst & Young.
The company is exploring every possible market in order to get best returns on its investment.
“It could be South Africa, US, Southeast Asia etc....we have appointed a team for that, Kotak Mahindra, Merrill Lynch, E&Y are there, we are actively looking at opportunities,” he said.
Of the total Rs 9,000 crore, BHEL has committed Rs 3,000 crore for picking equity in state genco projects over the next four years.
BHEL currently has a capacity to supply equipments for generating 15,000 MW electricity annually and is in process to enhance it to 20,000 MW by March next year.