Thursday, May 26 2005 16:57 Hrs (IST) - World Time -

New Delhi: In the first disinvestment case of the current fiscal, the Government today (May 26, 2005) approved the sale of 10 per cent of its equity in Bharat Heavy Electricals Ltd ( BHEL) to mop up around Rs 2,000 crore.

The Government holds 67.72 per cent equity in BHEL at present and after the sale of it's stake, its share in the Navratna company will come down to about 57.72 per cent, Finance Minister P Chidambaram told mediapersons after a Cabinet Committee on Economic Affairs (CCEA) meeting, which cleared the proposal.

The offer will be conducted through book building route and the stock of BHEL will be split in consultation with Department of Heavy Industry and the Department of Disinvestment to provide affordability to small retail investors in the offer, Chidambaram said.

"Out of the stake sale, 15 per cent will be reserved for BHEL employees. This would enable small and retail investors also in prized share," he said.

BHEL stock was ruling at around Rs 896 a share, up almost three per cent from yesterday's (May 25, 2005) closing of Rs 870.15, at the Bombay Stock Exchange.

Ten per cent of the BHEL equity amount to around 2.4 crore of shares. At the current market price of Rs 896, it would enable the Government to raise around Rs 2150.4 crore.

However, the exact ratio of the split and pricing of the issue would be decided after lead manager to the offer is appointed.

To a question on possible reaction by Left parties, the Finance Minister said that they have been consulted on the matter.

However, Communist Party of India Marxist (CPM) in a statement ''strongly'' opposed the disinvestment in BHEL.