Government approves 26% strategic sale in BEML

Government approves 26% strategic sale in BEML NEW DELHI: The government has approved of 26% strategic sale in state run BEML Ltd. The company in a notification to stock exchanges informed that the government, ministry of defence has approved of the strategic sale plan. A senior finance ministry official said that the stake sale may take place early next fiscal. Employee union said that they

will oppose the move. “The government of India, ministry of defence, has communicated 'in-principal' approval of the cabinet committee on economic affairs (CCEA) of the government of India, for strategic disinvestment of 26% equity shares in BEML Limited,” it said in its notification to the exchanges.

The government currently holds 54.03% stake in the firm. “The said shareholding would be sold to the strategic buyer/s to be identified by the government of India by following due procedure,” the firm added.

The firm’s scrip closed at Rs 993.35 at the Bombay Stock Exchange down by 0.62%.

A finance ministry official said that the government has already identified the procedure for strategic sales. “The mechanism is already there. We will soon start the process but the stake sale may take place early next fiscal,” he added.

An evaluation committee which will also have representation from the administrative ministry will arrive at a valuation, invite bids and recommend a reserve price.

The core group of secretaries on disinvestment, which is headed by cabinet secretary, will now meet to finalise the terms and conditions of the sale, including price. “Then it will go to the CCEA for final approval,” he said.

An inter-ministerial group headed by secretary DIPAM will then approve the appointment of intermediaries such as transaction advisors and legal advisors.

The government has set up an Independent External Monitor (IEM) which comprise of former chief justice of India, RC Lahoti and two other members.

“They have been given the mandate to vet the process of valuation and oversee the transaction process. All this may take some time,” he added.

Employee unions have opposed the move to privatize BEML Ltd. “We are going to hold protest on January 28 and are collecting signatures from all union employees including that of other state run firms,” said Munnagappa, president of BEML Union HQ & Marketing.

In October 2016, the cabinet had given its in principal approval to Niti Aayog’s proposal for strategic sale in more than a dozen state run enterprises which include BEML.

So far this fiscal the government has raised Rs 21,432 crore through disinvestment which also includes buy back offers from marquee firms such as Coal India and NMDC. Stake sale of L&T stocks held through Specified Undertaking of the Unit Trust of India (SUUTI) had garnered another Rs 2,000 crore, thus making for the highest receipts through disinvestment.

The government has budgeted for Rs 56,500 crore of revenue from disinvestment, including Rs 20,500 crore from strategic sales in this fiscal.

In December, the government had approved the sale of surplus land of Hindustan Antibiotics Limited, Indian Drugs & Pharmaceuticals Limited, Rajasthan Drugs & Pharmaceuticals Limited and Bengal Chemicals & Pharmaceuticals Limited as would be required, to meet their outstanding liabilities.