Govt.’s continued focus on defense and rail sectors to be key growth drivers for BEML says CMD

What has led to the turnaround at BEML?

The biggest driver has been the ecosystem for the PSUs in the last 8 to 9 years and the kind of ecosystem that has been provided to manufacturing companies like us. For companies like BEML which are the epitome of Make in India, the Atmanirbharta thrust of the government has worked well. But It does not mean that we are getting orders on the platter. We are in three business verticals namely mining, defense, railways/ metro and more than 75 to 80% of our orders are executed through competitive bidding.  The focus of the government on three sunrise sectors of Defence, railway/metro and infrastructure have added to the existing velocity and accelerated our growth. Looking at the continued focus of the government on defense and rail sectors, these two verticals are going to be the key growth drivers for BEML for the years to come. We are also focusing on exports which will add to our top and bottom lines. 

What is company’s 5 years roadmap?

Consolidation of our core capability and further growth in defense, aerospace and rail/metro verticals. I believe these verticals will contribute to atleast 65% of the company’s top line which is currently around 50%.  Diversification into areas which are organic to our present forte. This will further take the company for the next 10 years. The growth path remains the same. We are focusing more on the strategic mobility for the defense, mobility in urban transportation as well as the mainline transportation system and extraction of the mineral wealth. Apart from building core capabilities in some kinds of armoured vehicles as well as going to organic sectors in mining that is underground mining. Going into the future we will have three to five signature moves which will define BEML for next 20 years from now. That is the kind of legacy that we are trying to build based on our core capabilities.

What are your plans in aerospace? 

As far as aerospace is concerned, we have taken baby steps uptill now. We are doing some small components for missile systems for air force applications and for the ISRO. We are starting with unmanned aerial vehicles (UAV) wherein we have entered into a partnership with IIT Kanpur. We have developed the first prototype which is under trials. It is a tactical UAV but it does not have any ammunition payload in it. You can call it a reconnaissance UAV. The aerospace business will add 2 to 3% to our overall revenue. We will grow it slowly and we will concentrate more on our core capabilities. 

The Indian Railways in modernising its fleet, what is the opportunity it has for you?

We have already supplied 17,000 coaches to the Indian Railways. Now the government is planning to replace majority of the trains with Vande Bharat. We are already manufacturing 10 rakes of Vande Bharat sleeper coaches and the first sleeper coach in the country will come from the BEML factory by Jan/Feb, 2024. That will be a game changer for us because the government is keen to get 800 sets of Vande Bharat trains by 2030.  Our capability in manufacturing stainless steel cars and on our experience on producing metro trains give us confidence that we can build aluminium trains for Indian Railways. We would like to be part of the aluminum trains supply system as and when the government considers introducing them. Working on such trains will help us getting into exports market.

How about exports?

The growth in physical exports has been phenomenal in the last 4 years. The number that we had in 2019-20, we have almost increased it 12 times in 2022-23. In 2023-24 the expectation is that we will further increase it by 40%. In the next 4 to 5 years the contribution of physical exports should be 10 to 15% of our sale turnover as compared to 3.5% now.  Apart from this we have deemed exports also which we supply to multilateral agency funded projects in the country because the payment is in foreign currency. If I include the physical and deemed exports, my total export turnover is a phenomenal 22% of our last year’s turnover.

Which are your export markets?

Physical exports are going to Middle-East, Africa region and neighbouring countries. Now Africa continues to be our focused exports market. Now we are also targeting the GCC , the erstwhile CIS countries including Russia. More than 90% of our physical exports come from mining and infrastructure segment. 

What are your investment plans?

This year we have already infused ₹200 crore. Further ₹100 crore will be invested this year. By next year capex will be ₹400 crore including the carried forward amount. We are mobilising from our own resources and going for short-term borrowings. The capex enhancement is mostly to augment our capability in our core areas like manufacture of armoured vehicles, one more line for manufacture of metro coaches or the Vande Bharat trains, replacing the old machines and modernizing our present ones with latest machines, and improving the physical infrastructure of our manufacturing facilities. 

What is your revenue growth plan?

This year we are targeting 20% revenue growth. In the next 5 years we would like to reach a level of ₹10,000 crore.