Why is Modi led central government selling BEML despite the efficiency with which defence vehicles are manufactured? Corruption behind it?

By Gireesh S., General Secretary, Bharat Earth Movers Limited (BEML) Employees Association, Palakkad, Kerala

BEML Ltd (Bharat Earth Movers Limited) is a central public sector undertaking under the Ministry of Defence that manufactures military vehicles such as Tatra trucks, Pinaka missile launchers, radar carrying vehicles and Sarvatra bridges, which have been used for decades by tens of thousands of soldiers to carry out safe military operations in the difficult hilly areas of Indian borders.

BEML, which started operations in Bangalore in 1964 with Rs 6.56 crore tax money of the people, has been able to refund over Rs 350 crore in dividend and tens of thousands of crores in taxes till date as a result of the hard work of the workers of the last 50 years. The Central Government has so far invested Rs 23.56 crore in BEML. Due to the efficiency of workers over five decades, a total of four manufacturing units and 32 regional offices have been set up in India and nearly Rs 50,000 crore worth of assets at market prices, including 3,500 acres of land, huge buildings and machineries.

BEML has already manufactured and supplied around 20,000 passenger coaches for the Indian Railways and around 3500 Metro coaches for the Indian Metro. In addition, BEML has already built about 50,000 earth mover vehicles for the iron and steel industry and construction in the country. BEML is a strategic entity that manufactures national security vehicles and is the only Indian company and the only public sector company to manufacture metro coaches in India. BEML is the only public sector in India that manufactures mining & construction vehicles.

While BEML gets orders worth Rs 4,000 crore per annum, 85% of the orders are received by participating in global tenders and defeating foreign and domestic multi-national companies. BEML had a turnover of Rs 3557 crore and a profit of Rs 93 crore for the financial year 2020-21. BEML currently holds orders worth Rs 12,000 crore.

Since BEML is a strategic entity, even if an Indian citizen asks the central government about BEML products or other things under the Right to Information (RTI) Act, 2005, the BEML’s information is not provided to any Indian citizen as it affects national security.

The Modi-led central government on January 4, 2021, decided to sell 26 per cent stake in BEML, the backbone of the Indian Army, to foreign and/or domestic corporate companies for around Rs 1,800 crore, including the management control.

The sale of BEML, a profit-making and national defence firm that has been operating for five decades, would put national security at risk. On January 5, 2021, the Chief Minister of Kerala, Shri. Pinarayi Vijayan had asked the Hon’ble Prime Minister to withdraw the sale of BEML by the central government. On January 6, 2021, workers at Kanjikode BEML started an indefinite strike against the invitation of expression of interest (EoI) to sell BEML, which had been built with people’s tax money and had become a global leader in labour efficiency.

Before BEML started manufacturing metro coaches, the country was procuring metro coaches from abroad for more than Rs 16 crore per coach. However, when BEML Metro Coach started production and won orders by defeating foreign companies in a global tender, foreign companies in India were forced to reduce the price of a coach from Rs 16 crore to Rs 8 crore. Through this, the central government has been able to reduce the project cost of various metro projects by around Rs 1 lakh crore. By privatising BEML, the central government will be forced to buy at the same price even if the foreign metro coach manufacturing companies enter into an understanding with each other and decide to sell it at more than Rs 20 crore per coach. As a result, over the next 10 years, there could be an additional expenditure of Rs 1 lakh crore by the central government. Courts in Brazil and Spain have barred a number of foreign metro construction companies (which win tenders in India) from winning contracts, citing collusion resulting in high prices for a metro coach. This has not happened so far in India since BEML operates as a public sector and participates in a global tender and gets orders.

If the central government privatises BEML, the only public sector likely to get the contract to manufacture semi-speed coaches required for Kerala’s K-Rail project, metro coaches required for Kochi Metro Phase II and coaches required for Thiruvananthapuram & Kozhikode monorail, Kerala will have to buy the required coaches from foreign companies at a hefty price if the central government privatises it. As a result, the cost of the projects will increase. If BEML will be retained as a public sector and if the aforesaid orders are received at the BEML Kanjikode unit, it will lead to thousands of new employment opportunities, directly and indirectly, and the state will get an additional revenue of about Rs 300 crore in taxes.

When the central government invited the expression of interest to sell BEML and told the Parliament that it was to increase efficiency, it was expected that there would be a provision in the tender that only better companies than BEML would be included in the final list. But the Modi government’s claim is hypocritical as it allowed real estate companies in the final list, which have no prior experience in making even toy weapons and by making only financial capacity of the bidder as the norm.

The country is facing a severe economic crisis due to the inefficiency of the Modi-led central government and the country’s assets and public sectors are being sold off. BEML’s base share price in the stock market, which is a testimony to the efficiency of BEML employees and the company, has jumped from Rs 10 per share to Rs 1,560 now. The sale of BEML’s 26 per cent stake will mean the sale of 1 crore 10 lakh shares of the Company. If the company was inefficient and these shares were to be sold at Rs 10 per share then the total value will only be Rs 11 cores only. Because of the hard work of the workers and the efficiency of BEML, the central government will get Rs 1,700 crore at price of Rs 1,550 per share.

The central government currently holds 54 per cent stake in BEML and the others have 46 per cent. BEML owns about 3,500 acres of land in the major cities of Bangalore, Mysore, Delhi, Mumbai, Chennai and Kochi. By selling 26% of its 54% stake for a share price of approximately Rs 1800 to a private company and giving them the management control the ownership of acres of land will also fall into the hands of the corporate. When the central government is privatising BEML’s Rs 50,000-crore market value assets and handing over management control for just Rs 1,700 crore, there seems to be massive corruption behind it. While the central government is implementing a policy of selling public sector undertakings like BEML to corporates at a throwaway price irrespective of the market price, when any central PSU is handed over to the state government to avoid closure, the central government is implementing the policy of asking the market price of land, building and machinery instead of the share price. When the state government agreed to take over Kanjikode instrumentation, which the central government had decided to shut down, the central government asked for the market price of the land to be paid by the state, which the state government had initially given for free to the central government. This clearly shows that the privatisation of PSUs by the central government is just to help the corporates.

Despite the COVID-19 pandemic, the activists have completed 435 days of indefinite dharna against the sale of BEML without any breaks. The indefinite dharna by the workers is not just to protect employment and wages, but also to protect national security which is being endangered by selling Rs 50,000 crore worth of assets built with the tax money of the people and created due to the efficiency of the workers who have been working for decades, at a mere Rs 1,800 crore share price and to protect national security threatened by privatising public property. Privatization will result in loss of 50% job reservation for the educated youth belonging to SC, ST and OBC. The central government loses lakhs of crores of rupees in taxes and dividends every year. While the Modi-led central government claims that India will implement ‘Make in India’ in the defence sector, how can it protect security when the existing defence firm like BEML is sold even to foreign companies.

It is seditious to sell BEML to foreign companies, which play an important role in national security during the possible period of The Third World War, along with the Russia-Ukraine conflict, the Indo-Pak border conflict. Those who claim that the BJP government is the protector of nationalism and patriotism, will realise BJP’s claim to be pseudo-patriotism from the sale of BEML, which manufactures national security vehicles, to foreigners. The general public and workers must come forward to protect national security and public property.