BHEL floats Rs 300-crore bonds

Mumbai: The public sector Bharat Heavy Electricals Ltd (BHEL) has floated Rs 300-crore secured bonds with the option to retain Rs 200 crore if oversubscribed. The tenure is of seven years with a put-and-call option after five years. The coupon is between 8.60 and 9.20 per cent. This is the first time that BHEL has tapped the market to raise funds through the issue of bonds.

The issue opened on 2 November and will close on 8 November. The bonds have been rated AAA by the Credit Rating Information Services of India Ltd (Crisil) and LAAA by the Investment Information and Credit Rating Agency Ltd (ICRA).

The funds thus raised will be utilised by BHEL for working capital requirements, modernisation and upgradation and to meet fund requirements of voluntary retirement schemes (VRS).

BHEL, as a cost-cutting measure, had downsized its staff from around 48,000 to 62,000 through VRS between 1999 and September 2001. The company had to pay Rs 480 crore under the scheme.

The highest safety ratings of the bonds are ascribed to BHELs strong position in the domestic power plant and heavy engineering sectors. The company has adequate order book to support a moderate growth in turnover in the next two to three years.