BEML put on the block, Centre invites EoI from strategic investors for 26% stake

By: |
January 4, 2021 2:15 AM

The buyer of 26% in BEML will have to make an open offer to buy another 26% in the company, according to Sebi rules.

The Bengaluru-based company operates under three major business verticals — mining & construction, defence & aerospace and rail & metro, by providing total solutions.The Bengaluru-based company operates under three major business verticals - mining & construction, defence & aerospace and rail & metro, by providing total solutions.

The Centre on Sunday invited expression of interest (EoI) from strategic investors for 26% stake in BEML, along with management control, adding one more central public sector enterprise (CPSE) to the pipeline of state-owned firms being put on the block. The last date for filing EoI for BEML is March 1, 2021.

At current market prices the 26% stake in BEML is worth about Rs 1,055 crore. Currently, the Centre holds 54.03% in the CPSE, which was formerly known as Bharat Earth Movers Ltd.

The balance stakes are held by mutual funds (19.21%), individuals (15.74%), foreign portfolio investors and financial institutions.

The buyer of 26% in BEML will have to make an open offer to buy another 26% in the company, according to Sebi rules.

The Bengaluru-based company operates under three major business verticals – mining & construction, defence & aerospace and rail & metro, by providing total solutions.

The disinvestment will be through a two-stage competitive bidding process. Shortlisted firms in the first phase, will be asked to submit financial bids. Non- core land and other assets will be hived off and will not be a part of the proposed disinvestment.

The company, with a staff strength of 6,602, made a net profit of Rs 68 crore in FY20 compared with Rs 64 crore in FY19.

According to EoI terms, companies, LLPs and Funds eligible to invest in India can participate subject to minimum net worth requirement of Rs 1,400 crore. Consortium bidding is permitted with lead member to have minimum 51% stake in the consortium. Sole bidder/ lead Member of Consortium to have positive Profit after Tax in at least 3 years out of immediately 5 preceding years.

Recently, the government received EoI from potential buyers for its 52.98% stake in BPCL (worth about Rs 44,000 crore at current market prices) and 100% in Air India. The sale of the national carrier could fetch the government only up to Rs 3,000 crore, post the buyer’s takeover of part of the airline’s debt. On December 22, the Centre invited EoI for its 63.75% stake in Shipping Corporation of India (SCI) worth about Rs 2,600 crore at the current market prices. The last outright sale of a CPSE by the government was carried out way back in FY04.

The disinvestment receipts so far this year have been about Rs 13,844 crore or 7% of the FY21 target Rs 2.1 lakh crore.

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