The strategic sale of BEML, formerly Bharat Earth Movers, will pick up speed only after the resolution of the Karnataka land assets, which is likely to take over three months, two government officials said.
After the resolution of the Karnataka land assets, which constitute the major chunk, the final share purchase agreement (SPA) will be floated and financial bids will be invited which will push the transaction to next fiscal year, they said.
“The resolution of BEML's land assets will take much more than a quarter. Though bulk of the land assets are resolved, a major chunk is of Karnataka that is remaining. We regularly review the process to find solutions. We will pick up speed once Karnataka land assets are resolved. Other land assets remaining are very minor,” a government official told Moneycontrol.
The Expression of Interest (EOI) for 26 percent stake sale of the defence PSU was invited in 2021.
“We are constrained with the BEML's land issues. Once states agree and resolve these issues, we will take three months during which final SPAs will be floated and financial bids will be invited,” he said.
Government’s 26 percent stake sale of BEML is worth about Rs 1,500 crore. The Centre’s total stake in the PSU is 54.03 percent.
From the central government’s end everything is ready. We will have to negotiate with states, settle land disputes and then go ahead for its strategic sale, another senior government official told Moneycontrol.
The strategic sale of BEML which has been stuck for long is in the last phase, however, the transaction is not being targeted for completion in the current financial year.
“After Karnataka land assets are sorted, then BEML strategic sale can proceed ahead. There was a delay due to Karnataka elections, and now due to the transfer postings of bureaucrats. The Department of Investment and Public Asset Management (DIPAM) has shared plan with the Karnataka state government, the calculations of the land assets at nominal circle rate. It is on a similar template on which land issues were sorted with Kerala,” he said.
A total of 17 states had given land to BEML out of which bulk of them have been sorted out with Karnataka still remaining.
For the PSU, a due diligence committee was formed earlier to identify non-core assets which had submitted its report. BEML Land Assets Ltd. (BLAL), the subsidiary of BEML, was listed earlier this year to park assets of the defence PSU.
BLAL was was incorporated in 2021 for the purpose of demerger of surplus or non-core assets of BEML as part of the strategic disinvestment.
The resolution of the land assets takes time as the non-core land is being purchased back by the states, at a rate agreed upon. For the land whose procession deed is with BEML, the state governments pay some token amount to BEML, which is usually at the nominal circle rate, the official said.
The Union Cabinet had approved the strategic sale of the PSU in 2016. Assets given on concessional terms to BEML need clarity like on the registration duty, stamp duty, which is time consuming.
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