Hundreds of workers of the Bharat Earth Movers Ltd. (BEML) unit at Palakkad, Kerala have been agitating since 6 January 2021 against the government’s move to privatise BEML. After completing 500 days of indefinite dharna on 24th May 2022, they held a protest convention and carried out a public awareness campaign. They have repeatedly and correctly highlighted the fact that their struggle is not just to safeguard their jobs, but to oppose the loot of public money. Workers at all other plants of BEML have also been opposing its privatisation.
The move to privatise BEML again shows that all arguments given by the government to justify privatisation of a PSU are false and to hide the fact that privatisation is done to serve the interests of Indian and foreign monopolies.
The big capitalist monopolies in the defense sector have been eyeing the large assets and profitable ventures of BEML. BEML has been a profit-making PSU since its inception in 1964. The value of its assets is estimated to be Rs 65,000 crore, including the value of land in Bengaluru and Mysuru alone, worth than Rs. 30,000 Crores.
BEML is a PSU of strategic importance in the defence sector. It manufactures missile launchers, tank aggregates, armoured recovery vehicles (ARV) and armoured repair and recovery vehicles (ARRV), bridging systems, transportation trailers, etc. It is precisely for this reason that BEML had been placed under the Ministry of Defence. With its highly capable workers, BEML can play a much bigger role in indigenising defence manufacture, thus reducing the dependence on foreign countries.
BEML’s turnover today is more than Rs. 3,500 Crores, with Rs. 2,400 Crores of orders from the Defence and Aerospace sectors alone. It has a current order book of around Rs.12,000crore .
The Government of India has invested only Rs.23.56 crores in BEML, including Rs.6.56 crores at the time of inception in 1964, whereas by way of dividend alone BEML has paid back more than Rs. 350 crores to the Government of India. This amount would have been much larger if the government had not sold off 46% of its shares to private entities.
The Union government had started the move to privatise BEML in 2016 but the opposition of workers forced the government to abandon the move. On 4 January 2021, the government again initiated the move to privatise by announcing its decision to sell 26% of its shares along with management control to a private company. Dilution of shareholding in BEML over the years has brought down the central government’s share to 54%. As of now Tata Motors of
group, Ashok Leyland of Hinduja group and Bharat Forge of Kalyani group, besides others are shortlisted for the sale. All these companies belong to big capitalist groups of India and are already in defence production.
At the current value of shares of BEML in the stock market, the sale of 26% shares will mean that a monopoly company will get the control of management and assets of over Rs 60,000 core by spending just about Rs.1500 crore!
The desire of the central government to privatise at any cost is also evident from the valuation policy it follows in case a state government wants to take over a PSU. When the Kerala state government agreed to take over the Palakkad unit after the privatisation plan was announced, the central government asked the state government to pay as per the market price of land whereas that norm is not applied when sold to private capitalists, who get it at ridiculously low prices!
The privatisation of BEML is a part of the policy of privatisation of defence production followed for the last 20 years in a step-by-step manner. In 2001 defence production was opened for the private sector and 26% FDI was permitted. FDI limit was raised to 49% in 2016 and to 74% in 2020. Another step to promote the privatisation of this sector was taken in July 2019 when 275 items that were so far produced by government ordnance factories, were declared “non-core”. This means that they can now be procured from the private sector.
The privatisation of defence PSUs through sale of shares has also been pursued for many years. During the last five years the partial privatisation of Hindustan Aeronautics Limited (HAL), Bharat Electronics Limited (BEL), BEML etc. has already been carried out. The share of private companies in defence production in India has been steadily increasing and was around 23% in 2019-20.
Another major step taken recently towards privatisation of defence production has been by corporatization of ordnance factories.
Monopolies interested in manufacture of coaches for metro trains are also interested in privatisation of BEML as it is the only competitor PSU for them in India. It is reported by workers that after BEML started producing and participating in tenders for manufacturing them, the foreign competitors were forced to bring down their price for a metro rail coach from Rs. 16 crore per coach to Rs.8 crore in one shot! They pointed out that this alone would have saved around one lakh crore rupees for the Indian government for metro rail coach orders placed so far! The privatisation of BEML will allow private monopolies to again raise prices of a metro coach.
The central government in conjunction with various state governments is setting up metro rail systems in 50 cities. This itself is likely to raise a demand of more than 5 thousand metro coaches. By bagging BEML, private owners will be able to exercise monopoly over this important sector.
All the unions at Palakkad plant came together to oppose its anti-national, anti-worker privatisation by forming a BEML Action Council. The Council also received support from -the central trade unions – CITU, INTUC and AITUC. The support received by them from people of Palakkad has forced the elected representatives as well as the Chief Minister of Kerala to openly support their struggle. They have also received support from workers of other public sector enterprises who are also fighting against privatisation.
Mazdoor Ekta Lehar supports the just struggle of BEML workers. All Indian people must oppose this loot of public money by private capitalists. Allowing further privatisation of the defence sector will endanger the safety and security of the Indian people, since it will encourage private capitalists to push for policies which will promote further militarisation of our economy.
BEML a ‘Mini- Navaratna” Public Sector Enterprise (PSE)
The Bharat Earth Movers Ltd. (BEML) is an important PSE in the defence sector. It was hived off from Hindustan Aeronautics Ltd. in 1964 with the objective of catering to the requirement of defence and has been of paramount importance to the defence sector. It was wholly owned and operated by India’s Ministry of Defence until 1992, when the government divested 25% of its holdings in the company.
It has manufacturing plants in Kolar Gold Fields, Bengaluru, Mysore and Palakkad. It has been rated by the Department of Public Enterprises (DPE) as “Excellent” from the corporate governance point of view.
Besides defence, BEML plays an important role in catering to core sectors like Aerospace, Rail, Power, Mining and Infrastructure. It is Asia’s second-largest manufacturer of earth moving equipment and controls 70% of India’s market in that sector. It manufactures a wide range of products to meet the needs of mining, construction, power, irrigation, fertiliser, cement, steel and rail sectors. The earthmoving equipment includes bulldozers, dump trucks, hydraulic excavators, wheel loaders, rope shovels, walking draglines, motor graders and scrapers.
Around 85% of the orders received by BEML are won by participating in global tenders and defeating foreign and domestic multinational companies. Competing with several MNCs, BEML exported its products to over 67 countries, earning Rs. 280 Crores of foreign exchange during last year alone.