Land spinoff holds up India’s $232 million BEML sale - sources
25/07/2023 05:26
NEW DELHI, July 25 (Reuters) - The privatisation 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
Karnataka Industrial Area Development Board (KIADB) to transfer
ownership, one of the sources said.
The company owns 526 acres of land in Karnataka that require
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 privatisation 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)
((nikunj.ohri@thomsonreuters.com; +91 90284 60730; Reuters
Messaging: twitter.com/nikunj_ohri))