The Hindu Business Line : Finance Ministry opposes writing off BHPV’s loans

New Delhi, Nov 2 The merger of Visakhapatnam-based Bharat Heavy Plate and Vessels Ltd (BHPV) with Bharat Heavy Electricals Ltd (BHEL) could be delayed further with the Finance Ministry not accepting the latter’s proposal to waive the ailing PSU’s loans. BHPV’s current outstanding to the Central Government as loans and interest is Rs 414.95 crore.

The company also owes Rs 263.97 crore to various banks and suppliers and has to repay Rs 47 crore to the Andhra Pradesh Government on account of different taxes, liabilities and bills.

BHEL conditions

BHEL had agreed to take over BHPV on the conditions that the Central Government waive off the loan and interest amount and the Andhra Pradesh Government also issue formal orders on the agreed concession and reliefs, including transfer of title for the land.

Sources informed Business Line that the Andhra Pradesh Government has agreed to waive off the loan and also said that it would transfer the 393 acres of land in possession of BHPV as a gift title deed.

The Andhra Pradesh Government, however, said that BHEL should not sell the land without the State Government’s permission.

Initially, the Board for Reconstruction of Public Sector Enterprises (BRPSE) had recommended that the Government should make cash infusion of Rs 263.97 crore, while BHEL should invest Rs 275 crore for upgradation of manufacturing facilities, capital expenditure and working capital.

The Board further said that the Central Government must also waive off loans and interest amounting to Rs 414.95 crore.

BHEL accepted the proposal and informed the Board that since it had orders worth about Rs 60,000 crore, it was going to expand the capacity and make necessary capital infusion.

BHEL also said that it intends to transfer the manufacturing of industrial boilers from their Tiruchi unit to BHPV.

“The Department of Expenditure (DoE) has said that though it agreed with the proposal of revival of BHPV through the takeover by BHEL, it is not supporting the proposal for providing the grant of Rs 264 crore to liquidate the outstanding liabilities.

It also does not support the proposal for writing off the equity,” sources said.

The official added that DoE has said BHEL should absorb all the liabilities itself as it had the resources in terms of necessary capital.

According to the Department of Heavy Industries, BHEL had made projections assuming the takeover of BHPV would be completed by November and had estimated that the turnover could touch Rs 350 crore by the end of the current fiscal itself.

BHPV currently has around 1,500 employees and can manufacture boilers, heavy pressure equipment and cryogenic nitrogen plant (liquid nitrogen plants).

It is also learnt that the union leaders of BHPV met the Prime Minister, Dr Manmohan Singh, last week, who said that he would look into the matter once the final Cabinet note is prepared.

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