BEML is actively investing in its future growth: Shantanu Roy

In a recent interview, Shantanu Roy, the Chairman and Managing Director (CMD) of BEML Ltd., a prominent Public Sector Undertaking (PSU) in India, unveiled the company's ambitious plans and the factors that have propelled its turnaround. BEML, known for its pivotal role in the modernization of Indian Railways' fleet and the defense sector, is poised for a promising future.

The Turning Point

Ecosystem for PSUs: BEML's resurgence can be attributed to the favorable ecosystem cultivated for PSUs in the past 8 to 9 years. The Indian government's commitment to nurturing domestic manufacturing companies, epitomized by the 'Make in India' initiative, has played a pivotal role in BEML's revival.

Atmanirbharta Thrust: BEML aligns seamlessly with the government's 'Atmanirbharta' or self-reliance thrust. This strategic focus has reduced dependency on imports, making BEML a prime example of self-sufficiency in the defense and railway sectors.

Competitive Bidding: Contrary to misconceptions, BEML secures the majority of its orders, exceeding 75 to 80%, through competitive bidding, a testament to its commitment to transparency and cost-efficiency.

Sunrise Sectors: The government's strategic emphasis on three sunrise sectors—Defense, Railways/Metro, and Infrastructure—has propelled BEML's growth trajectory. These sectors serve as the cornerstone of BEML's future prospects.

A 5-Year Vision

Core Capability Consolidation: BEML's 5-year roadmap revolves around consolidating core capabilities and fostering growth in the defense, aerospace, and rail/metro verticals. These segments are expected to contribute to a minimum of 65% of the company's top-line revenue, up from the current 50%.

Diversification: BEML's diversification strategy seeks areas that organically complement its existing strengths. This forward-looking approach is poised to sustain the company's growth for the next decade.

Strategic Focus: BEML is channeling its efforts into strategic mobility for defense, urban transportation, mainline transportation systems, and mineral resource extraction. Additionally, BEML is focusing on developing core capabilities in armored vehicle production and venturing into the organic sector of underground mining.

Signature Moves: BEML's future is marked by three to five strategic moves that will shape its legacy for the next two decades. These moves are rooted in BEML's core competencies.

Aerospace Aspirations

BEML's foray into aerospace is characterized by gradual progress. The company currently manufactures small components for missile systems used in Air Force applications and by ISRO. A notable endeavor is the development of a tactical Unmanned Aerial Vehicle (UAV) in collaboration with IIT Kanpur. Although this UAV lacks an ammunition payload, it serves as a reconnaissance UAV, marking BEML's entry into the aerospace sector. This segment is expected to contribute 2 to 3% to BEML's overall revenue.

Capitalizing on Railway Modernization

BEML's pivotal role in the modernization of Indian Railways is exemplified by its supply of 17,000 coaches. With the government's plan to replace a significant portion of trains with Vande Bharat, BEML is manufacturing 10 rakes of Vande Bharat sleeper coaches. The first sleeper coach is set to roll out from the BEML factory by January/February 2024. This endeavor aligns with the government's goal to acquire 800 sets of Vande Bharat trains by 2030. BEML's proficiency in manufacturing stainless steel cars and its experience in producing metro trains positions it as a strong contender in the aluminum train supply system when introduced.

Exploring Export Opportunities

Phenomenal Growth: BEML has experienced remarkable growth in physical exports over the past four years. The export figures that stood in 2019-20 have surged nearly twelvefold in 2022-23. In 2023-24, BEML anticipates a further 40% increase in exports. Over the next four to five years, physical exports are expected to contribute 10 to 15% to BEML's sales turnover, up from the current 3.5%.

Deemed Exports: In addition to physical exports, BEML also engages in deemed exports. These exports cater to multilateral agency-funded projects within the country, facilitated by foreign currency payments. When combined, physical and deemed exports constitute an impressive 22% of BEML's turnover.

Export Markets: BEML's physical exports primarily target the Middle-East, Africa, and neighboring countries. Africa remains a focal point for exports, with expanding ambitions to reach the GCC, erstwhile CIS countries, including Russia.

Investment in the Future

BEML is actively investing in its future growth. This year, the company has already infused ₹200 crore, with an additional ₹100 crore earmarked for investment. By the following year, BEML's capital expenditure (capex) is set to reach ₹400 crore, inclusive of carried-forward amounts. The funding for these investments is sourced from internal resources and short-term borrowings. BEML's capex enhancement primarily focuses on bolstering core capabilities, expanding armoured vehicle manufacturing, adding production lines for metro coaches and Vande Bharat trains, modernizing existing machinery, and improving physical infrastructure within its manufacturing facilities.

A Visionary Growth Strategy

BEML's immediate goal is to achieve a 20% revenue growth this year, with a long-term vision to reach ₹10,000 crore in revenue over the next five years. As the company embarks on this transformative journey, its commitment to self-reliance, diversification, and global outreach will undoubtedly contribute to India's journey towards self-sufficiency in critical sectors and reinforce BEML's position as a global player in the defense and transportation industries.

(Based on the recent Q&A with The Hindu)