Why is the government of India planning to hive off BEML?

With a stiff divestment target and nowhere close to it, the Indian government is now on a war footing after having lost quite a few months to the COVID scare and the battle against the pandemic. The government has now invited bids to sell 26% stake in Bharat Earth Movers Limited or BEML and the final deal is expected to happen soon.

BEML is a profitable engineering and defence company that is majority owned by the government. Currently, the government of India owns up to 54% in BEML but it plans to give up majority control of the company by selling 26% stake in the company. This is part of the broader plan to reduce the government’s stake in non-strategic PSUs.

The government already has some stocks lined up in this list and it includes BPCL, Shipping Corporation, Container Corporation, Air India and now BEML is the latest one. SBI Capital Markets has been appointed by the government as the transaction advisor for the stake sale in BEML and this should help them boost their divestment revenues during the year.