InvestorQ : How can the government approach divestment of companies like BEML?
sarah Leo made post

How can the government approach divestment of companies like BEML?

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Rashi Mehra answered.
4 months ago
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That is an interesting question. The government owns 57% in BEML and post the sale, it will reduce to 31%. Government as well hold on as earn Rs.1400 crore from elsewhere. It really does not have to sell a profit making PSU with a robust order book at such a cheap rate. BEML will be a major beneficiary of more in-sourcing of defence orders. Instead of rushing through divestment, here are 3 options that government can look at for BEML.

Firstly, government can empower managers to create better value for the company with incentives. The second option is to monetize order book as is being done by construction and infrastructure companies. The third option is to adopt the model of the Indian Railways. In this case, bits and pieces of high value activities have been successfully hived off; like IRCTC, RVNL etc. That could be much better than selling BEML absolutely cheap.

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