BEML is once again available. Long disinvestment delay prompts concerns about potential effects on bidders and stakeholders

BEML is once again available. Long disinvestment delay prompts concerns about potential effects on bidders and stakeholders

BEML disinvestment is back on the table after a two-year hiatus, and the government is anticipated to shortly request financial bids for the strategic sale. The amalgamation of its non-core operations into BEML Land Assets Limited and its subsequent listing on public markets marked a significant turning point at that time. It was now time to request financial bids for key assets connected to building and defense after the inventory of land and other non-essential assets was finished.

Similar to a land bank that has been split out from the parent bank to guarantee that the winning bidder for BEML would really control the business and have access to BEML's profitable real estate via the back door, the new entity is called BEML Land Assets Limited. won't make an effort to succeed. The extra excess assets that were divided up prior to privatization will thereafter be sold, with the revenues going to the shareholders. It seems sense that the current emphasis should be on separating BEML's core businesses from the company's land holdings in order to resolve the many conflicts.

Expressions of interest (EOI) were received by the government from four to five prominent corporations whose business models include strong military and infrastructure franchises, in response to its January 2021 offer for preliminary bids for the sale. Putting BEML on par with Shipping Corporation, Pawan Hans, as well as IDBI Bank, the Department of Investment as well as Public Asset Management (DIPAM) defines the firm as 'Closed for Phase II Transactions,' where only selected bidders may make financial proposals. BEML's 26 percent share will bring in around Rs 1,500 crore at the current market pricing.

This protracted delay in the disinvestment process is mainly explained by the fact that complicated property transactions need several state and federal government permits, endangering BEML's customers, suppliers, staff, and non-government shareholders. was unable to have faith in the choice to disinvest. Until the elections in 2024, at the latest, this will not take place. But now that things are moving forward, it's important to consider the winning bidder's goals for BEML's three distinct business sectors: rail and metro, military and aerospace, and mining and construction. Only when an investor's portfolio has comparable verticals does strategic advantage arise; however, the selected EOI bidders only own franchises in one or a maximum of two verticals, leaving the other verticals unsatisfied. As an alternative, after the statutory lock-in period, the winning bidder may make a "whole purchase" and then shut an undesired vertical.

Are the selected parties interested in purchasing BEML, considering the length of time that has elapsed between EOI filing and financial bid? What is going to happen to the 5573 permanent employees of BEML, the 4775 contract workers, and the five employee unions located across its sites, who are not allowed to be laid off or posted?

Unlike the current turnover-to-employee ratio at BEML, senior staff would undoubtedly be impacted when their typical public sector work culture is uprooted by a private sector buyer. Other players will need to deal with cartelized high equipment pricing, particularly its suppliers and consumers, the Indian Railways, the Indian Armed Forces, and public sector behemoths like Coal India, SAIL, NTPC, and Metro Corporation in different cities. A reduction in rivalry.

Why did the government decide to sell up the profitable PSU BEML? Is it simple to sell BEML? Has the government come to the realization that conducting business is not its responsibility? Is there a minimum amount that has to be placed in the Treasury, or is it better to sell it now because BEML's value can decrease later? Without a doubt, the firm surpassed the Rs 4,000 crore threshold in FY22 after years of being mired in the Rs 3,000 to Rs 4,000 crore turnover area.

How else has the EOI invitation affected things? The business seems slow, the order booking situation and the income estimate for the future are concerning, important departments like R&D, product design, and quality have lost talent, and the careers of demotivated staff are jeopardized. Realizing that the two options available are privatization and the HMT/ITI path, which caused once-profitable PSUs to go bankrupt.

All parties involved in DIPAM's disinvestment process will be greatly impacted by the uncertainty that the process won't peak anytime soon. One stark example is the recent BEML chairman selection process, in which only three internal candidates took part since qualified outsiders avoided the organization.