NEW DELHI, July 25 (Reuters) – The privatization of India’s BEML (BEML.NS) is delayed due to delays in final approvals from the local state government to complete the transfer of land to a spun-off unit, two sources said.
The Indian government is looking to sell 26% of the total 54% stake it owns in the company along with a transfer of management control.
The sale could net the government about Rs 19 billion ($232.5 million) at current share prices, bolstering New Delhi’s plans to raise Rs 510 billion in divestment proceeds in fiscal 2024.
As a precondition for the sale, the government spun off the land owned by BEML into a separate entity, BEML Land Assets. (BEMA.NS), and listed it on the stock exchanges in April. The exercise took a year after the government invited initial offers.
The land has been set aside and conditionally transferred to BEML Land Assets, pending final approval from the state government.
BEML owns large land assets in the southern state of Karnataka and requires approval from state authorities and the Karnataka Industrial Area Development Board (KIADB) to transfer ownership, one of the sources said.
The company owns 526 acres of land in Karnataka which requires the transfer of title deeds from BEML to the land assets entity, the second source said.
The title deed documents the legal sale or transfer of ownership of the land.
The finance ministry and the managing director of BEML, which sits on the board of BEML Land Assets, did not respond to emails sent by Reuters.
The government will not invite financial offers for the sale of BEML until these approvals are obtained, both sources said. However, the government plans to complete the sale in this fiscal year.
“The government does not want the new buyer to be forced to approve such land or the possible disputes that may arise,” the first source said.
The plan is to resolve any issues related to the land before inviting bids for BEML’s privatization and give buyers certainty to operate the company without any interference.
($1 = 81.7180 Indian rupees)
Reporting by Nikunj Ohri; Edited by Dhanya Ann Thoppil
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