Interested bidders for state-run defence equipment maker BEML Ltd have been asked to disclose any business ties with either China or Pakistan, said two people aware of the matter.
The government is taking this step due to the strategic nature of BEML’s operations, which includes manufacturing Prithvi missile launchers, they said, requesting anonymity.
This also comes against the backdrop of the department for promotion of industry and internal trade (DPIIT) notifying on 18 April 2020 changes in the foreign direct investment (FDI) policy by mandating government nod for FDI inflows from countries with which India shares a border.
“A self-declaration has been sought regarding the nature of present operations in China or Pakistan, if any,” said one of the two people cited above.
BEML operates in three major business segments—defence and aerospace, mining and construction, and rail and metro. The company also makes military vehicles, and railway and metro coaches. It has nine manufacturing units across Bengaluru, Kolar Gold Fields, Mysuru, Palakkad and Chikkamagaluru.
SBI Capital Markets Ltd is the transaction adviser for the BEML divestment plan.
“This (information on links with China or Pakistan) is required for security clearance,” said the second person cited above.
Several bidders have submitted their expressions of interest (EOIs) to buy a 26% stake in BEML by the 22 March deadline set by the department of investment and public asset management (Dipam). The Centre, which owns 54% in BEML, sought bids for the stake sale along with the transfer of management control, on 4 January.
A SBI Capital Markets spokesperson declined to comment. Queries emailed to the spokespeople for the finance ministry and Dipam on Wednesday night remained unanswered till the time of publishing this story.
“Multiple EoIs received for the privatization of BEML. The transaction will now move to the second stage,” Dipam secretary Tuhin Kanta Pandey said in a tweet on 22 March.
Mint had earlier reported that at least six companies including Tata Motors Ltd, Mahindra and Mahindra Ltd , Ashok Leyland Ltd, Bharat Forge Ltd and Megha Engineering and Infrastructure Ltd are looking to take part in the privatization of BEML. Mint couldn’t ascertain whether they had submitted their EoIs.
A stake sale in BEML will help bolster the government’s efforts to raise funds through asset sales this fiscal. It garnered ₹32,835 crore in FY21 through offers for sale, buybacks and three initial public offerings. It hopes to generate ₹1.75 trillion from disinvestment receipts in this fiscal.
The disinvestment process has picked up pace with adviser SBI Capital Markets submitting reports on stake sales in Balmer Lawrie & Co., Mecon Ltd, Andrew Yule and Co. Ltd and Bharat Heavy Electricals Ltd to Dipam.