Centre Initiates Processes to Disinvest 15% Stakes of BDL

The Centre has kick started the process of disinvesting 15% of its stakes in the Bharat Dynamics Limited (BDL), a defence public sector undertaking (PSU). Of its total share of 87.75%, government intends to disinvest 15% through Offer for Sale (OFS) method.

“The government of India intends to disinvest 15% paid up equity capital of BDL out of its shareholding of 87.75% through Offer for Sale (OFS) method of shares by promoters through the stock exchanges as per Securities and Exchange Board of India (SEBI) Rules and Regulations,” reads a notification from the Department of Investment and Public Asset Management (DIPAM).

Along with this, according to the Ministry of Finance and Department of Investment and DIPAM, the government is also considering “allotting shares to eligible and willing employees of BDL at a discount to the Issue/discovered price (lowest cut off price) up to a maximum of certain percentage of the OFS size subsequent to completion of the transaction under OFS. The percentage and extent shall be decided in due course. Merchant bankers and Selling Brokers will be required to render such assistance as may be required in this connection.”

BDL, a Government of India enterprise under the Ministry of Defence, was established in Hyderabad in the year 1970 to be a manufacturing base for guided missiles and allied defence equipment. BDL, a Miniratna Category I, is amongst a few industries in the world having capabilities to produce state-of-the-art guided weapon systems. The company is poised to enter new avenues of manufacturing, covering a wide range of weapon systems such as surface-to-air missiles, defence systems, torpedoes, air-to-air missiles etc., making it a world class defence equipment manufacturer.

Read more: How Nationalist is Defence Privatisation?

As one of the leading defence PSUs, BDL engaged in manufacturing surface-to-air missiles (SAMs), anti-tank guided missiles (ATGMs), underwater weapons, launchers, countermeasures and test equipment. Also, BDL is the sole supplier of SAMs and ATGMs to the Indian Armed Forces.

12.25% stakes of BDL had already been disinvested, and now another 15% stakes are open for the disinvestment through OFS.

“Disinvestment of around 12% stakes were done officially and we have continuously been opposing the move of the centre. We even wrote to the minister regarding the same,” Murali of BDL Employees Union told NewsClick.

BDL 3,200-strong workforce including officers and employees. The strength of the employees stands at 2,300.

The authorised share capital of the Company is Rs 200 crore and the paid-up equity capital is Rs.183.28 crore as on 31.03.2019. Government of India holds 87.75% of the equity of BDL. The face value of each equity share is Rs 10. Profit After Tax for the fiscal year 2018-19 is Rs 422.59 crore for BDL. As on March 31, 2019, it has a net worth of Rs 2268.55 crore.

According to the Department of Defence Production, there are nine defence PSUs across the country. Out of these, most of the PSUs, including Hindustan Aeronautics Limited (HAL), Bharat Electronics Limited (BEL), Bharat Heavy Electricals Limited (BHEL), Mishra Dhatu Nigam Limited (MIDHANI), Mazagon Dock Shipbuilders (MDL), had been put up for disinvestment.

“The defence industry should not be privatised. Any disinvestment in public sector, especially in defence sector will be opposed by us. The policies of the government to open the door of the defence production to the private sector is not acceptable,” C Sreekumar of All India Defence Employees Federation (AIDEF), the body which represents about four lakh civilian employees in the government defence sector.

Read more: Defence Employees Say Privatisation not Needed

Though the BJP led centre was forced to stay its plan to corporatise 41 ordnance factories because of the united struggle of the employees and unions, Sreekumar points out how they plan to privatise the government defence sector. “The government cannot privatise a government defence sector undertaking. For that, they made strategy that first corporatise the unit that comes directly under the defence ministry and then go for the disinvestment,” he explained.

“Raising the same issue, we have relentlessly been fighting for the past four years. In due course of time, all the public sector will be handed over to the private players. See, Bharath Dynamics, which manufactures missiles is one of the most sensitive units in the defence sector. So, it’s clear that any privatisation and disinvestment is not for the national interest,” Sreekumar added.