BEML manufactures products the Prithvi missile launcher for the armed forces

Firms vie for 26% stake in state-run defence equipment maker

NEW DELHI: At least six companies, including TATA Motors Ltd, Mahindra and Mahindra Ltd and Ashok Leyland Ltd, are looking to buy a 26% stake in state-run defence equipment maker BEML Ltd, two people aware of the developments said.

Bharat Forge Ltd and Megha Engineering and Infrastructure Ltd may also submit expressions of interest for the government’s stake in BEML, the people said on condition of anonymity.

Companies such as TATA Motors, Mahindra and Ashok Leyland are looking to seek control of BEML as part of their strategy to grow their defence manufacturing businesses and cut dependence on the core commercial vehicle business, which is cyclical in nature.

“For auto companies, BEML is a major competitor in the tenders and would eventually win a lot of them since it’s state controlled. Hence, it makes sense for these companies to acquire the heavy-vehicle manufacturing company," said a senior executive from one of the firms cited above, requesting anonymity.

The government, which owns 54% in BEML, invited expressions of interest for the stake sale in the defence equipment maker, along with the transfer of management control, on 4 January. The department of investment and public asset (Dipam) initially set 1 March as the deadline for submission of interest but later extended it to 22 March.

SBI Capital Markets Ltd is advising the government on the sale process.

“After the EoIs (expressions of interest have been received, SBI Capital Markets will intimate the shortlisted bidders of the next stage," said one of the two people cited above.

BEML manufactures products such as the Prithvi missile launcher, army transportation vehicles, and railway and metro coaches. The company operates in three major business segments—mining and construction, defence and aerospace, and rail and metro. It has nine manufacturing units in Bengaluru, Kolar Gold Fields, Mysuru, Palakkad and Chikkamagaluru.

Spokespeople for SBI Capital Markets, Mahindra and Mahindra Ltd and Ashok Leyland Ltd declined to comment.

A spokesperson for Megha Engineering confirmed the company’s interest in BEML but declined to elaborate.

Queries emailed to the spokespeople for the finance ministry, Dipam and TATA Motors on Friday afternoon and Bharat Forge on Saturday morning remained unanswered till the time of publishing this story.

The stock price of BEML rose by 24% in the last one month to ₹1,171.90 on BSE.

Presenting the Union budget for the year starting 1 April, finance minister Nirmala Sitharaman announced details of a new central public sector enterprise (CPSE) policy, paving the way for the privatization of non-strategic state-owned companies.

Sitharaman has said that the government aims to keep the “bare minimum" CPSEs in four strategic sectors and privatize the rest or close down unviable ones. The four strategic sectors are atomic energy, space and defence; transport and telecommunications; power, petroleum, coal and other minerals; banking, insurance and financial services.

The stake sales in BEML will help bolster the government’s efforts to raise funds via asset sales for the next fiscal year.

The government hopes to generate ₹1.75 trillion from disinvestment receipts in the coming fiscal.

The government missed its ₹2.1 trillion FY21 disinvestment target by a wide margin and pushed key transactions such as that of Air India Ltd and Bharat Petroleum Corp. Ltd to the next fiscal year.