India Plans To Sell BEML’s Non-Core Assets As It Revives Strategic Sale: BQ Exclusive
India plans to sell more than Rs 1,000 crore worth of non-core assets of BEML Ltd., according to an official, setting the stage for strategic divestment of the state-owned rail coach maker amid a revenue crunch.
The asset sale is being pushed ahead of the plan to cut the government's holding by more than half to 26% in the company that has interests ranging from defence, mining to manufacturing rail coaches, the official said on the condition of anonymity as details aren’t public yet. The divestment in BEML, 54.03% owned by the government, is pending since the cabinet approved the share sale in December 2016.
The government’s revenues collapsed because of the lockdown to contain the Covid-19 pandemic, which is expected to cause the first economic contraction in four decades in Asia’s third-largest economy. It’s pushing divestment of companies that have already received initial nod to mop up resources. For the ongoing fiscal, the budget has set a record divestment target of Rs 2.1 lakh crore.
The sale of BEML’s assets, including land, properties and investments in subsidiaries, is expected to fructify in the coming months, the official quoted earlier said.
Emailed queries to the company and the Finance Ministry didn't elicit a response.
The Department of Investment and Public Asset Management identified the non-operational and surplus assets.
The surplus land not in use by the company for its operations has to be monetisated before the government reduces its stake in the company, according to the company’s annual report. DIPAM had appointed CBRE South Asia Pvt. Ltd. and JLL Property Consultants (India) Pvt. Ltd. for monetising properties.
The company had freehold land worth Rs 12.58 crore and leasehold land worth Rs 78.78 crore at book value. The current market value of the land, acquired at low prices, is not known.
The company owns freehold land including 560 acres in Mysore, but it needs to get the title of the entire piece and registration in its name, according to its annual report.
The challenge is to sell land and properties as permissions to change land use rights take time, the official quoted earlier said.
BEML’s subsidiaries include Vignyan Industries and MAMC Industries, and it also has a joint venture BEML Midwest. The government initiated the sale of BEML’s 96.5% stake in Vignyan Industries last year but the proposal didn’t draw buyers and BEML is looking at closing the unit.