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Centre Reaffirms Disinvestment of Profit-making BEML

The disinvestment would entail the sale of 26% of government shareholding in the company, which is involved in defence, rail and mining sectors, and the transfer of management control to a “strategic buyer”.
Centre Reaffirms Disinvestment of Profit-making BEML

Image Courtesy: CSR Vision

The BJP-led Central Government on July 8 defended in Rajya Sabha its plan to disinvest 26% of its stake in the public-sector undertaking, Bharat Earth Movers Limited (BEML) claiming that the move would improve the efficiency of the company. The disinvestment would entail the sale of 26% of government shareholding in the company which is involved in defence, rail and mining sectors along with the transfer of management control to a “strategic buyer”.

Replying to the questions raised by KK Ragesh, Defence Minister Rajnath Singh said, “The government had given ‘in-principle’ approval for strategic disinvestment of BEML to the extent of 26% out of the government shareholding of 54.03% with the transfer of management control to a strategic buyer.”

When asked about the sale of company’s land and other assets at market value, Singh said, “Transaction Advisor, Legal Advisor and Asset Valuer were appointed by the government as per the procedure and mechanism laid down for this purpose. It has been decided to hive off the surplus land and other assets from the strategic disinvestment of BEML and dispose them off separately.”

The unions and associations in the company, however, have raised questions over the government’s move to privatise the company which has been making profits from its inception. The government had given approval for the strategic disinvestment of BEML in November 2016. Since then, the unions have been opposing the government’s move to privatise such an important company.

Read More: MB Rajesh’s Viral Post Brings Defence Privatisation to the Spotlight

Then Parliamentarian of Palakkad, MB Rajesh, had pointed at a possible scam behind the disinvestment process during his term 2014-19. The government is selling off the shares and assets for a limited amount. Whereas the assets of BEML are estimated to be worth well above Rs. 50,000 crores. In Bengaluru alone, BEML has 205 acres of land. In Mysore, BEML owns 530 acres, 2,400 acres in Kolar Gold Fields and 375 acres in Palakkad. Even, the Kerala government and then Siddaramaiah government in Karnataka had intervened in this matter stating their opposition to the privatisation of BEML.

Opposing the government’s claim that the disinvestment would help increase the efficiency of the company, one of the employees of BEML said, “BEML is the only PSU that manufactures Metro coaches in India. The company has served orders from Bengaluru, Jaipur, Kolkata, Delhi and Mumbai. Among these, Mumbai was the latest one. Then how can the government blame the efficiency of the company?,” he asked.

The BEML had bagged the Rs 3,015 crore Mumbai metro corridor order after competing with international companies including CRC from China. “BEML was the lowest among seven bidders which included seven internationally renowned companies,” read the press information from the Ministry of Housing and Urban Poverty Alleviation.

“Also, the Centre has no liability over BEML. Recently, Rs 23.56 crore had been invested by the centre, while BEML had paid about Rs 200 crore as dividend to the government,” said the employee on the condition of anonymity.

Read More: BEML Employees Hold Protest in Delhi Against Defence Privatisation

When questions were raised about national security while privatising such an important company which is contributing to the defence sector, the defence minister replied that disinvestment is a policy followed by all governments as well as the recommendation of the NITI Aayog on strategic sale of assets in public sector undertakings.

"If strategic disinvestment is being done, all precautions are being taken so that there is no question mark on our national security. We are taking all precautions and national security is foremost for our government," he said.

He said BEML has businesses in several segments and the defence segment constitutes only 16.16%, while its rail and network business comprises 31.12% of its total business, and mining and construction is 52.27%.

“If someone asks about the products of BEML through RTI, they don’t give reply pointing out the security concerns. Then, how can the government handover such an important sector to private players,” asked one of the employees of BEML.

Among the stakes of the private players, the Reliance group has 11%, Kodak has 4% and foreign investors have 13%. Along with these private entities, LIC also owns stakes in the company. If Reliance group manages to get further 26% stakes through the disinvestment drive, they would have a major share of the company. The control of the company, which has a workforce of 8,200 would go to them as well.

Read More: BEML Employees' Protest Against Defence Privatisation Reaches Delhi

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