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NTPC-Bhel JV defers equity dilution

NTPC Bhel Power Projects Ltd has deferred its plan to divest 50% equity due to adverse market conditions and lack of revenue visibility.

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NEW DELHI: NTPC Bhel Power Projects Ltd, the equal joint venture between power utility NTPC Ltd and power equipment maker Bharat Heavy Electricals Ltd (Bhel), has deferred its plan to divest 50% equity due to adverse market conditions and lack of revenue visibility.

K Ravi Kumar, chairman and managing director, Bhel, said the plan to dilute equity has been put off by three years, till the company starts getting orders for the manufacture and supply of power equipment.

The government wanted to sell stake in the joint venture of the two state-owned firms to give it full flexibility to work as a private company. NTPC Bhel had plans to start with orders for engineering, procurement and construction works and ancillary power plant equipment. But it will now wait for a steady revenue stream, which will come in three years when it starts booking orders for the manufacture and supply of main power equipment too.

“Only then we will get a premium on the equity to be sold,” Kumar said. He added that market conditions are likely to improve by then and the company will get good valuation.

Market valuations of companies across the world have fallen due to the economic turmoil. India has to increase power generation equipment capacity to support the planned hike in electricity generation capacity.

Bhel, the country’s largest power equipment maker, has the annual capacity to make equipment to generate 10,000 megawatt (mw) of electricity. It plans to increase this capacity to generate 15,000 mw 2009-end, and 20,000 mw by 2011-end.

India is looking to add 79,000 mw of electricity generation capacity in the current Five-Year Plan, which ends in March 2012. In the Twelfth Five-Year Plan, it hopes to add another 84,000 mw.
a_shaleen@dnaindia.net
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