The Hindu Business Line : TELK: Kerala invites EOIs for stake sale

THE Kerala Government has invited expressions of interest from companies for participation as a strategic partner in the State-owned Transformers and Electricals Kerala Ltd (TELK).

The Enterprises Reforms Committee (ERC) had recommended sale of 26 to 49 per cent equity stake in the company to a strategic partner and the Government had subsequently issued an order accepting the recommendation.

The State Government has an equity stake of 82 per cent in TELK. The other stake-holders are Hitachi (eight per cent), financial institutions (seven per cent) and public (three per cent). The company's technical tie-up with Hitachi had expired some time ago.

TELK was referred to the Board for Industrial and Financial Reconstruction (BIFR) in 1995 after making continuous losses and suffering huge erosion in net worth. The company was declared sick in 1997.

The same year, BIFR had approved a rehabilitation package with a Government commitment of Rs 17.14 crore. However, the company continued to incur loss and further erosion in net worth. Later BIFR directed that the Government should evolve a revival package by April 15, 2003, after obtaining the recommendation of Expenditure Reforms Commission (ERC).

According to the latest performance review by the Bureau of Public Enterprises, the company has accumulated losses to the tune of Rs 63.79 crore and the net worth stood negative at Rs 20.82 crore. However, the company has been performing well in the last couple of years and during 2002-03, its sales went up by 26 per cent to touch Rs 82.91 crore as against Rs 65.24 crore in the previous year.

The capacity utilisation had also improved considerably and the company made an operating profit of Rs 6.91 crore as against an operating loss of Rs 1.08 crore in 2001-02.

ERC, in its recommendation, had pointed out that in order to enable TELK to play a significant role in the power industry, there was need for bringing in a strategic partner through a transparent process. This was also necessary to ensure focus on research and development as also product development, the areas that have suffered after the technical tie-up with Hitachi expired.

ERC had also noted that TELK had significant brand equity compared with small and medium players, but did not have national presence like BHEL despite the company being not Kerala-centric. Product-wise, the company's strength was transformers of up to 400 K.V. But, it was at a disadvantage in terms of transformers of higher system voltages. Besides, the existing design of the 400 K.V. transformers had to be optimised to make them more cost-effective.

More Stories on : Disinvestment | Electrical Goods | Kerala

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page