BHEL set to buy Germany's AE&E Lentjes: report

Power equipment manufacturer Bharat Heavy Electricals (BHEL) is planning to buy Germany-based AE&E Lentjes to access its high-end circulating fluidised bed combustion (CFBC) boiler manufacturing technology, The Financial Express reported today. CBFC is a combustion technology used in power plants.

State-owned BHEL, the country's top power equipment maker, has hired the services of legal and financial consultants to conduct due diligence for the proposed takeover, said the report. "We have already appointed a financial consultant to examine the company's liabilities. Besides, we have hired another consultant to look into the legal aspects relating to the takeover," the paper quoted an unnamed senior official in BHEL as saying.

Meanwhile, BHEL on Monday reported a 40-per cent jump in net profit to Rs6,021 crore in 2010-11, against Rs4,311 crore in the previous financial year.

''Localisation of technologies, continuous working on supply chain and lower material costs helped in good profit,'' B Prasada Rao, chairman and managing director BHEL, said while announcing the company's provisional annual results in New Delhi.

Rao attributed the higher revenues and profits to a change in the company's accounting policy on provision for warranty obligation for construction contracts. ''This has resulted in an increase in turnover by Rs2,456 crore and increase in profit before tax at Rs414 crore,'' he said.

The company also posted a turnover of Rs43,451 crore in 2010-11, which is a 27 per cent increase over the Rs34,154 crore in 2009-10. BHEL's shareholders have been paid an interim dividend of 132.5 per cent, while the earnings per share in the previous fiscal climbed to Rs123 per share.