Tuesday, May 31, 2005

BHEL Disinvestment

The Hindu has an interesting article on the BHEL disinvestment. It throws light on an often-overlooked reason for the M&A folks to target these companies:
...BHEL, like several other "navratnas" has been showing profits continuously for some years, but has not been allowed to spend the money for its own expansion and development. Instead, it has simply added to its reserves, such that its reserves currently amount to well over Rs. 50,000 crore.
The corporate predators must be licking their chops at the thought of getting their hands on such a windfall. From the article:
The fear is that if they are privatised, the private purchaser will then have access to the use of these huge reserves that it can use to its own ends rather than in socially desirable ways.
Rightly so.