Govt clears 26% strategic sale in defence equipment manufacturer BEML

New Delhi: Government will sell 26 percent stake in defence equipment manufacturer BEML, making it the first major PSU to be sold through strategic disinvestment, which may fetch the exchequer over Rs 1,000 crore.

In a notification to the stock exchanges, BEML said that the Cabinet has given an 'in-principal' approval for strategic disinvestment of 26 percent equity shares in BEML Ltd out of government's shareholding of 54.03 per cent.

At the current market pricing of Rs 999.50 a share, 26 percent stake of BEML could fetch the exchequer over Rs 1,000 crore. After the strategic sale, government stake in the PSU would come down to 28.03 percent.

"The said shareholding would be sold to the strategic buyer/s to be identified by the government of India by following due procedure," BEML said.

The strategic sale approval is just the third in over 12 years. In September, the Cabinet had cleared strategic sale of Bharat Pumps and Compressors Ltd, while in December it had approved sale of India's first pharma company Bengal Chemicals and Pharmaceuticals Ltd as well as Hindustan Antibiotics Ltd.

These PSUs will be the first privatisation since sale of Jessop and Co in 2003-04 under the NDA government headed by Prime Minister Atal Bihari Vajpayee.

These are among the public sector units that NITI Aayog has identified for sale of government's majority stake to private companies in order to bring in greater efficiency and professionalism in their functioning.

Established in May 1964, BEML operates on three major business verticals for associated equipment manufacturing -- mining and construction, rail and metro and defence and aerospace. Its turnover has risen to more than Rs 3,500 crore.

The PSU, under the administrative control of defence ministry, provides equipment support to Indian Army and other defence forces by manufacturing variants of Tatra vehicle for all terrain operation.

It also supports the aerospace operations by supplying ground support equipment such as Aircraft Towing Tractor, Multi Purpose Weapon Loader and Crash Fire Tender.

The government is targeting Rs 56,500 crore in disinvestment proceeds this fiscal. Of this, Rs 36,000 crore is to come from minority stake sale in PSUs and another Rs 20,500 crore from strategic stake sale.

The fiscal target continues to remain far off with total collections of about Rs 24,000 crore in the nine months of the financial year so far.

Incidentally, the first strategic sale in a PSU also happened under the NDA rule in 1999-2000 when the government sold 74 percent equity in Modern Food Industries to Hindustan Lever for Rs 105.45 crore.