India Said to Plan Sale of 26% in BEML to Meet Deficit Goal

  • Plan includes sale of three SAIL factories, one NMDC plant
  • Comments sought from ministries; cabinet approval soon

India plans to sell a 26 percent stake in wagon maker BEML Ltd. as well as auction holdings in a clutch of other companies to help meet a record asset-sale target, people familiar with matter said.

The plan, which will be sent for cabinet approval soon, includes the sale of three factories of Steel Authority of India Ltd. to a strategic partner, the people said, asking not to be identified as they aren’t authorized to speak with the media. The government’s also looking to sell an NMDC Ltd. steel plant as well as its entire stake in Scooters India Ltd.

Prime Minister Narendra Modi’s administration is seeking to narrow Asia’s widest budget deficit without cutting public spending that’s key to sustain India’s 7-percent-plus growth rate. The shortfall reached 76.4 percent of the full-year target in the in the first five months of the fiscal year through August.

Other companies on the block include Hindustan News Print Ltd., Ferro Scrap Nigam Ltd., Pawan Hans Helicopters Ltd., Project & Development India Ltd., Bharat Pumps & Compressors Ltd., Central Electronics Ltd., Bridge and Roof Company India Ltd. and Hindustan Prefab Ltd., the people said. The proposal has been circulated to the various ministries for their comments. Finance Ministry spokesman D.S. Malik declined to comment.

The government aims to collect 565 billion rupees ($8.5 billion) from sales of stakes in state companies in the year through March 31. That includes 205 billion rupees from majority stakes, even though previous attempts have been hindered by labor union protests and volatile financial markets.

About 360 billion rupees is being sought from the sale of minority stakes in companies such as Coal India Ltd. and Oil & Natural Gas Corp., which seems ambitious considering India’s highest ever annual collection since 1992 has been 243 billion rupees. That happened in a year when the benchmark stock index rallied 25 percent; equities have risen 2.6 percent over the past 12 months.

Shares of BEML rose 0.8 percent to 935.10 rupees in Mumbai. Scooters India fell 2.9 percent, compared with a 0.3 percent drop in the benchmark S&P BSE Sensex.

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