BHEL eyes Acquisition, Joint-Ventures in US & Europe

Bharat Heavy Electricals (BHEL) is eyeing an acquisition or a joint venture (JV) partnership with companies from the US and Europe. The company will look for companies that are engaged in new transmission as well as ultra super critical technologies to take on the challenge posed by Chinese companies and even upcoming JVs formed by Indian manufacturers.



"BHEL is certainly looking at options to acquire companies or form a joint venture with companies from the US and Europe. The actual investment and other details are currently being worked out. However, I do not see any problem as BHEL has a networth of over Rs 12,000 crore," BHEL CMD B P Rao said. He further pointed out that such a deal will also aid BHEL in getting access to foreign markets.



"We are fully aware of the prevailing competition in the market. We have identified and prioritised a few of the major stress areas in order to maintain our pole position as technology and market leader in the power equipment segment in the domestic market," Rao said.



He informed that, BHEL had secured orders for 11,200 Mw despite competition, mainly from independent power producers, by the end of December, 2009. "Chinese equipments are cheap as the companies enjoy a lot of subsidy. Let the government take a decision on imposing some duty," he noted.



Besides, he also said the company has entered into partnerships with NTPC, Nuclear Power Corporation, KEL and HEC to strengthen execution capabilities through effective sharing and sourcing critical inputs. BHEL has formed a JV with the UK-based Sheffield Forgemasters for forging and casting.



The company has an equity capital of Rs 489.52 crore as of March 2009. The face value per share is Rs 10. At the current price of Rs 2,407.45, the P/E multiple stood at 37.55 with book value of 264.32 and price to book value of 9.11.



Regarding the financial performance, for quarter ended September 2009, the company reported incline of 29.92% in its net sales to Rs 6,727.52 crores as compared to Rs 5,342.60 crores of corresponding period of previous year. Further, the company reported gain of 39.32% in net profit to Rs. 857.88 crores for quarter ended September 2009.



The total shareholding pattern of the company as on December 2009 stood at Promoters- 67.02%, Institutional Investors- 26.26%, General Public- 1.69% and Other investors- 5.03%.



BHEL is the largest engineering and manufacturing enterprise in India in the energy-related and infrastructure sector which includes Power, Railways, Telecom, Transmission and Distribution, Oil and Gas sectors and many more. It is the 12th largest power equipment manufacturer in the world.