CCEA spikes Bhel’s securitisation plan

mumbai/new delhi: the cabinet committee on economic affairs has rejected a proposal from bharat heavy electricals to securitise outstanding dues worth rs 1,550 cr with state electricity boards. according to sources in the company and the government, the power ministry had cleared the proposal before it was forwarded to the cabinet committee on economic affairs. under the plan, bhel wanted state governments to issue state government bonds against outstanding dues. the plan was submitted in line with the recommendations of the montek singh ahluwalia committee which suggested that state-government guaranteed bonds be issued in lieu of outstanding dues of the state electricity boards to entities like ntpc, nhpc, power grid and coal india. however, bhel was not covered under the committee’s recommendations. the company came up with its own plan and approached the government with the backing of the power ministry. the market was expecting a positive response on the issue of outstanding dues. the adverse outcome could hit trading sentiment in bhel. market players believe that the company may have to work out new ways of recovering its outstanding dues. the stock ended the week on friday at rs 164 gaining 1.7 per cent over its previous close. “bhel has good orders on hand. the securitisation of outstanding dues would have resulted in boosting the company’s earnings by atleast 20 per cent. the market would have been pleased with even half of the total outstanding amount of rs 1,550 cr. this may not have reflected immediately on the company’s books as the benefit would have accrued only after bhel finished negotiating with individual state electricity boards. a decision in bhel’s favour would have improved the quality of the company’s balance sheet significantly,� a fund manager at a domestic mutual fund said. the bhel stock has witnessed hectic trading activity in the market on the back of developments with regard to the privatisation of public sector units. analysts believe that besides hopes of the recovery of outstanding dues, expectation regarding privatisation of bhel, and its topline growth are other factors watched closely by the market. the government has not, however, announced any plans to privatise bhel. “privatisation is actually not the only issue that drives the valuation at bhel. the company has good revenue visibility and has managed to bag good orders. the topline growth is actually the key area that the market is expected to focus on. the company management has taken steps to cut costs. it has managed to reduce its workforce by 15 per cent in two years and has reworked its contract structure for employees,� the fund manager added. bhel will announce its annual results on monday.