NEW DELHI, July 25 (Reuters) – The privatization of India’s BEML (BEML.NS) is held up due to delays in final approvals from the local state government to complete the transfer of land to a spun-off unit, said two sources.
The Indian government is looking to sell 26% out of the total 54% stake it holds in the company along with a transfer of management control.
The sale could fetch the government about 19 billion rupees ($232.5 million) at the current share price, bolstering New Delhi’s plans to raise 510 billion rupees in divestment proceeds in fiscal year 2024.
As a pre-condition for the sale, the government spun off 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 initial bids were invited by the government.
The land was demerged 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 approvals 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 that requires the transfer of title deeds from BEML to the land asset entity, said the second source.
Title deed documents the legal sale or transfer of land ownership.
The Ministry of Finance, and the managing director of BEML, who sits on the board of BEML Land Assets, did not respond to emails sent by Reuters.
The government will not invite financial bids for BEML’s sale until these approvals are secured, said both sources. However, the government plans to complete the sale in this fiscal.
“The government does not want the new buyer to be forced into any such land related approvals or any possible disputes that could arise from it,” the first source said.
The plan is to resolve any land-related matters before inviting bids for privatization of BEML, and give certainty to buyers to run the company without any interference.
($1 = 81.7180 Indian rupees)
Reporting by Nikunj Ohri; Editing by Dhanya Ann Thoppil
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