BHEL to invest Rs 2,360-mn in subsidiary

Visakhapatnam: Navratna engineering and manufacturing enterprise Bharat Heavy Electricals Limited (BHEL) formally took over Visakhapatnam-based Bharat Heavy Plates and Vessels (BHPV) here. BHPV was incurring losses over the last decade and struggling to complete the existing orders due to lack of sufficient working capital.

An authority letter to this effect was handed over by Satyanarayana Dash, secretary, department of heavy industries, to K Ravi Kumar, chairman and managing director of Bhel, in the presence of Santosh Mohan Dev, minister, heavy industries and public enterprises, Union finance minister P Chidambaram, Andhra chief minster YS Rajasekhara Reddy and urban development minister S Jaipal Reddy.

Ravi Kumar said BHPV could be developed as a dedicated centre for industrial boilers, ensuring better delivery. Though the present cost structure of BHPV is similar to Bhel, costs were expected to come down due to factors like increased volumes, better financial capability leading to lower working capital borrowing costs.

Initially, Bhel will invest Rs 236 crore over the next three years, in addition to induction of experienced manpower and required technology. BHPV's turnover is expected to cross Rs 1,000 crore in five years, he added.

For protecting the interest of employees working in BHPV, the state government had extended several relief measures like transfer of the title of land measuring 386.73 acres in possession of BHPV — which was given to them in 1965 — as gift deed in its favour, waiver of registration and stamp duties, sales tax arrears of Rs 42.16 crore, non-agricultural land assessment (nala) tax of Rs 43 lakh and waiver of dues towards water, tax property tax and vacant land tax of Rs 3.96 crore.

Around 1,332 of the total 1,512 employees of BHPV (balance unqualified would be redeployed) would be continued in employment. It would create indirect employment to thousands of people and the existing ancillaries would be doubled to 34.

It may be recalled that the state government had handed over 393.86 acres to BHPV in Tungalam, Akkireddypalem, Mindi and Chinna Gantyada villages of Visakhapatnam district in 1965, for setting up the factory and township. Between 2002 and 2005, central public sector undertaking suffered huge losses and was referred to the Board of Industrial and Financial Reconstruction.

According to the finance minister, the UPA government had revived 29 loss-making public sector units during the last four years and infused funds to the tune of about 13,500 crore.

On the occasion, a memorandum of understanding for setting up the country's largest integrated coal gasification combined cycle power plant at Vijayawada was also signed between Bhel and APGenco. The 125 Mw plant would cost about Rs 950 crore, of which Bhel would contribute Rs 420 crore and APGenco Rs 530 crore, Jairam Ramesh, minister of state for power and commerce, said.