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| BEL buyback plan likely in a week |
| BS Reporter / New Delhi Jan 13, 2012, 00:32 IST |
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The department of disinvestment and the ministry of defence are slated to draw up a strategy on buyback of shares by Bharat Electronic Limited (BEL)and submit it to the prime minister’s office within a week.
This may kick off the government’s public sector undertaking buyback plan which is one of the options considered by the government to increase disinvestment proceeds.
At a meeting convened on January 3 by the principal secretary to the prime minister, Pulok Chatterjee, with chiefs of the Central Public Sector Enterprises, it was decided that secretary (defence production) will discuss the BEL buyback option with secretary (disinvestment) and apprise the PMO. The information was to be passed on within two weeks.
The meeting was held to review the investment plans of certain CPSEs, which hold cash and bank balance in excess of Rs 1,000 crore and have investment plans of above Rs 1,000 crore in the coming financial year.
BEL has cash and bank balance of Rs 4,500 crore but has investment plan for only Rs 1,724 crore.
Secretary (defence production) and CMD of BEL were urged to consider ways of expanding the operations of the company.
However, their view was that the company may not be in a position to grow more and buyback of equity may be the best strategy to use the surplus resources most productively in national interest.
The disinvestment department has proposed buyback and bulk sale among various options listed in its extended disinvestment strategy to increase disinvestment proceeds and look at ways other than the stock market route in the face of the bearish market situation.
The plan is likely to get Cabinet nod soon, said finance ministry officials. A decision was postponed by the Cabinet last week to get a more due diligence view. A concrete plan to initiate the buyback option through BEL is likely to kick-start the whole process.
The disinvestment proceeds has been Rs 1,144 crore against a target of Rs 40,000 crore for the financial year.
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