BEML disinvestment: Tata Motors, Ashok Leyland, Mahindra in fray for buying govt stake

BEML disinvestment: Tata Motors, Ashok Leyland, Mahindra in fray for buying govt stake

BEML disinvestment: Bharat Earth Movers Limited (BEML) is an Indian Public Sector Undertaking. It manufactures a variety of heavy equipment used for earthmoving, transport, and mining and has its headquarters in Bengaluru.

The Government of India owns 54% of the total equity after BEML partially disinvested. Public, Financial, Foreign Institutional Investors, Banks, and employees hold the rest of the 46% equity. It serves India’s core sectors such as Defense, Rail, Power, Mining and Infrastructure, as a MiniRatna Category 1 company.

As a part of the government’s privatization drive. The center has decided to disinvest 26% of its total 54.03% stake in BEML. The government expressed interest in stake sale in the defense equipment maker along with the transfer of management control. According to a press release by BEML, stake sales will be done by an open bidding route. The Department of Investment and Public Asset (DIPAM) has extended the deadline for interested bidders until 22nd March to submit their Expression of Interest (EOI).

Among the 6 companies of the many showing interest in buying the 26% stake at BEML, Tata Motors Ltd, Mahindra Ltd, and Ashok Leyland Ltd are known to be looking to buy the stake. Anonymous reports of Bharat Forge Ltd and Megha Engineering and Infrastructure Ltd’s interest to submit EoI for the government’s stake in BEML have been surfaced. Megha Engineering has confirmed its interest in BEML, while spokespersons of Ashok Leyland and Mahindra have declined to comment.

Companies are showing interest in seeking the stake as a part of their strategy to grow their defense manufacturing biz. This would help the companies to cut down on the dependence on core commercial vehicle business. A report of a senior executive from one of the firms has been cited saying, “For auto companies, BEML is a major competitor in the tenders and would eventually win many, since it is state-controlled. Hence it makes sense for these companies to acquire the heavy vehicle manufacturing company”.

For advising and managing the proposed strategic disinvestment of BEML, the government has appointed SBI Capital Markets as the advisor. Post receipt of the EoI, SBI Capital Markets Ltd will intimate the shortlisted bidders of the next stage.

BEML will get benefits from the stake sale by covering the government’s efforts to raise funds via asset sale for the next fiscal year. They hope to generate ₹1.75 trillion from disinvestment receipts in the coming fiscal year.

The government had missed its ₹2.1 trillion FY21 disinvestment target by a wide margin. They had pushed key transactions such as that of Air India Ltd and Bharat Petroleum Corp. Ltd to the next fiscal year. In the past three months, the stock of BEML has outperformed the market by zooming 75 percent. As compared to the 11% rise in the S&P BSE Sensex. Shares of BEML surged 13% to hit a 52-week high on the BSE in intra-day trade. After the reports of six companies interest in buying a 26% stake in BEML.