CIL and Damodar Valley close to finalizing JV structure

The consortium of BEML, Coal India Ltd and Damodar Valley Corporation is understood to have reached at a settlement
over the equity structure of the joint venture company that will run the Durgapur-based Mining and Allied Machinery
Corporation.

In July, the consortium acquired the assets of the closed facility from the High Court appointed liquidator at a consolidated
sum of INR 100 crore.

According to sources in the consortium, as against the originally proposed equity structure of 48:26:26 between BEML, CIL
and DVC, the consortium partners have now settled for 50:25:25. However, the agreement is yet to be firmed up.

After acquisition of the assets (by the consortium), BEML had asked for a majority 51 per cent stake in the proposed venture.
The proposal was opposed by both CIL and DVC on the ground that such a move would convert the venture into a subsidiary
of BEML, thereby reducing the role of the partners to mere investors.

It now appears that by offering 50% stake to BEML, the consortium is trying to strike a middle path. In the new scheme of
things, both CIL and DVC would bring down their stakes below the critical 26%. Though BEML is being offered a higher
stake, the venture would not be regarded as a subsidiary of the mining equipment major.

According to sources, the latest proposal would also ensure that DVC and CIL two major users of mining and earth moving
equipment in the eastern region of the country can place orders with the venture on nomination basis. DVC is a major power
generation outfit with captive coal mines in the region.