BHEL plans to set up non-banking finance company

Cash-rich Bharat Heavy Electricals Ltd is looking at creating a NBFC to mainly fund projects in the power sector.

BHEL had appointed financial services firm Crisil to advise the company on floating a non-banking finance company.

“Crisil has submitted the report and the board would soon be considering the same... A final decision is likely in April or after that,” sources said.

The state-run entity in a recent regulatory filing said that its board of directors would meet on March 15 to consider “the report of the consultant regarding formation of a non-banking finance company”.

BHEL is estimated to have a cash surplus of over Rs 9,000 crore.
Sources said creation of the NBFC would also help the company to better utilise its cash surplus, especially in terms of financing infrastructure projects. The order-book of the company stood at Rs 1,58,000 crore at the end of the third quarter of the current fiscal and the company expects to achieve robust growth in 2010-11 and beyond, according to BHEL’s third quarter financial performance statement.

The company had reported a turnover of over Rs 34,000 crore in the 2009-10 fiscal, with a net profit of over Rs 4,310 crore. In the first nine months of this fiscal, BHEL’s net profit stood at Rs 3,213.2 crore.

In September last year, BHEL CMD B P Rao said the firm may go for a separate investment arm for funding power sector projects and the NBFC can target opportunities in overseas markets.

BHEL’s operations are organised under three business verticals — power, industry and overseas business. The industry segment includes transmission, transportation and renewable energy.

It has installed equipment with a total generation capacity of over 1,00,000 MW for utilities and captive and industrial users, according to the company website.

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