We plan to achieve a turnover of Rs 10,000 crore by 2016-17
V RS Natrajan, Chairman and Managing Director, BEML
We have plans in place for over Rs 1,000-crore capex in the next five years that include our expan?sion projects, modernisation, new ventures and acquisitions," states V RS Natrajan, Chairman & Managing Director, BEML. Natrajan, in an exclusive interview with Equipment India, gives all details about the company's progress and future plans. Excerpts from the interview.
After a tough last year, are things back on track this fiscal? How is BEML placed to meet the surging demands for advanced products and services in this evolving scenario?
The year 2009-10 was a tough year due to global recession which had its impact even in India. However, we managed to post an incredible 18 per cent growth in sales, thanks to the good order book at the start of the year and the production efforts to convert these into sales. We have started the year 2010-11 also on a good note with a strong order book of Rs 5,208 crore.
The rail and metro is a sunrise industry with many cities planning for the Metro and we are confident of procuring sizeable orders in this segment. On the defence side, many of our offers are under process at MoD which we hope to convert into orders shortly. On the whole, although some of the orders are yet to be procured to achieve the current year targets, we are reasonably well placed and confident of achieving and excelling our targets. Curr?ently the market is graduating towards high-end, high capacity and high-tech products. BEML has a consistent R&D policy and undertakes research and deve?lopment of products on a continuous basis. Approximately around three per cent of sales is allocated as R&D budget every year. We have brought in many new products viz., front-end loader BL200-1, excavator BE1250, snow cutter, catenary maintenance vehicle (CMV), intermediate metro cars, aluminum wagons, standard gauge metro cars, etc., in the various sectors to meet the increasing demand of our customers for technology products.
How does BEML look at ending this fiscal?
As has been indicated already, we hope to have a healthy growth over last year and we are committed to achieving our target. With the orders on hand and the prospects we hope to cross Rs 4,000 crore sales during this fiscal. We expect to have a comfortable order book of over Rs 6,000 crore for the fiscal 2011-12, which will help us realise our plan of achieving Rs 5,000 crore by 2011-12, two years ahead of plan envisioned in our corporate plan.
What sort of topline growth are you looking at in the next five years and where do you see the growth coming from?
Having set our plans to achieve Rs 5,000 crore by 2011-12 two years ahead of our corporate plan target date, we have swung into action to redraw and recast our corporate plan and have a vision to achieve a turnover of Rs 10, 000 crore by 2016-17. We expect the business to come from all sectors with reasonable growth, besides the sunrise industry rail and Metro; considering that all major players in the mining sector are going in for massive expansions to meet the supply deficit, we are hopeful of garn?ering major share of equipment business in the coming years. Our defence business is also poised for major growth with our proposed foray into high value defence equipment and MoD's plans to increase defence procurement. Further, recently we have entered into two more high growth industry sectors, aerospace and dredging equipment. These being new businesses for the period starting the next Five Year Plan, we hope to garner reasonable business in the start and consolidate to procure size?able orders at the end of the plan period to achieve our corporate Plan - II targets ending with 2016-17.
How do you look at the threat of import from LCC? Do the domestic players who have invested heavily over years have a level-playing field?
The import of products is predominant only in the mining and construction segment of our business. This is a very high performance demanding segment where performance, availability of machines, spares supply and servicing are of highest importance. Luckily, none of the imports of the LCC for the mining and construction business are matching these standards. As such, we have never felt the threat of imports from LCC.
Is there a move towards more affordable product lines?
Cost of ownership is one of the deliverables of our value chain. We have a consistent R&D policy and we have introduced several new products and upgraded many an existing products to match the customer requirement both on technology and affordability. We will continue to apply with value engineering on a regular basis to all other products to ensure cost leadership to deliver affordable products through our product portfolio. Further, we have all plans in place to diversify into new lines having synergy with our existing product lines that will further expand our horizon of business.
What are basic objectives of the tie-up with CIL & DVC?
The future of mining is going to be underground mining owing to growing environmental concerns worldwide. Fur?ther, the coal deep down is understood to be of higher quality which has high calorific value used in power industry. The acquisition of MAMC as a consortium with CIL and DVC is a strategic initiative. These companies will place orders for the next five years required for their mines and the consortium company will also make efforts to procure orders from others to take this company to higher sales growth.
How are exports doing? Is the impact of recession still there?
The world is yet to recover from the global recession which impacted our exports business in the mining segment. The exports are yet to pick up. We are putting in our best efforts to garner business from the growing markets at potential geographical locations and we hope to do better business than 2009-10 fiscal during the current year.
Finance still seems to be a challenge BEML customers are both from institutional i.e., coal companies and the contractor segment. While the institutional customers generally do not need any financing, we are arranging finance to individual customers / contractors through our consortium banks and NBFCs who are into equipment financing, with whom we have entered into arrangements for BEML products.
To what do you attribute the success BEML has registered so far?
BEML's success is all attributable to the human resource and talent that the company has, which delivers all that is expected by the management. Organisat?ional restructuring, coupled with employee empowerment and right delegation, creating a sense of ownership resulting in responsibilities to deliver, have all proved to be the winning strategy. Management has shown the direction, the path and leadership and it is the people who have carved the way forward.
We have plans in place for over Rs 1,000-crore capex in the next five years that include our expan?sion projects, modernisation, new ventures and acquisitions," states V RS Natrajan, Chairman & Managing Director, BEML. Natrajan, in an exclusive interview with Equipment India, gives all details about the company's progress and future plans. Excerpts from the interview.
After a tough last year, are things back on track this fiscal? How is BEML placed to meet the surging demands for advanced products and services in this evolving scenario?
The year 2009-10 was a tough year due to global recession which had its impact even in India. However, we managed to post an incredible 18 per cent growth in sales, thanks to the good order book at the start of the year and the production efforts to convert these into sales. We have started the year 2010-11 also on a good note with a strong order book of Rs 5,208 crore.
The rail and metro is a sunrise industry with many cities planning for the Metro and we are confident of procuring sizeable orders in this segment. On the defence side, many of our offers are under process at MoD which we hope to convert into orders shortly. On the whole, although some of the orders are yet to be procured to achieve the current year targets, we are reasonably well placed and confident of achieving and excelling our targets. Curr?ently the market is graduating towards high-end, high capacity and high-tech products. BEML has a consistent R&D policy and undertakes research and deve?lopment of products on a continuous basis. Approximately around three per cent of sales is allocated as R&D budget every year. We have brought in many new products viz., front-end loader BL200-1, excavator BE1250, snow cutter, catenary maintenance vehicle (CMV), intermediate metro cars, aluminum wagons, standard gauge metro cars, etc., in the various sectors to meet the increasing demand of our customers for technology products.
How does BEML look at ending this fiscal?
As has been indicated already, we hope to have a healthy growth over last year and we are committed to achieving our target. With the orders on hand and the prospects we hope to cross Rs 4,000 crore sales during this fiscal. We expect to have a comfortable order book of over Rs 6,000 crore for the fiscal 2011-12, which will help us realise our plan of achieving Rs 5,000 crore by 2011-12, two years ahead of plan envisioned in our corporate plan.
What sort of topline growth are you looking at in the next five years and where do you see the growth coming from?
Having set our plans to achieve Rs 5,000 crore by 2011-12 two years ahead of our corporate plan target date, we have swung into action to redraw and recast our corporate plan and have a vision to achieve a turnover of Rs 10, 000 crore by 2016-17. We expect the business to come from all sectors with reasonable growth, besides the sunrise industry rail and Metro; considering that all major players in the mining sector are going in for massive expansions to meet the supply deficit, we are hopeful of garn?ering major share of equipment business in the coming years. Our defence business is also poised for major growth with our proposed foray into high value defence equipment and MoD's plans to increase defence procurement. Further, recently we have entered into two more high growth industry sectors, aerospace and dredging equipment. These being new businesses for the period starting the next Five Year Plan, we hope to garner reasonable business in the start and consolidate to procure size?able orders at the end of the plan period to achieve our corporate Plan - II targets ending with 2016-17.
How do you look at the threat of import from LCC? Do the domestic players who have invested heavily over years have a level-playing field?
The import of products is predominant only in the mining and construction segment of our business. This is a very high performance demanding segment where performance, availability of machines, spares supply and servicing are of highest importance. Luckily, none of the imports of the LCC for the mining and construction business are matching these standards. As such, we have never felt the threat of imports from LCC.
Is there a move towards more affordable product lines?
Cost of ownership is one of the deliverables of our value chain. We have a consistent R&D policy and we have introduced several new products and upgraded many an existing products to match the customer requirement both on technology and affordability. We will continue to apply with value engineering on a regular basis to all other products to ensure cost leadership to deliver affordable products through our product portfolio. Further, we have all plans in place to diversify into new lines having synergy with our existing product lines that will further expand our horizon of business.
What are basic objectives of the tie-up with CIL & DVC?
The future of mining is going to be underground mining owing to growing environmental concerns worldwide. Fur?ther, the coal deep down is understood to be of higher quality which has high calorific value used in power industry. The acquisition of MAMC as a consortium with CIL and DVC is a strategic initiative. These companies will place orders for the next five years required for their mines and the consortium company will also make efforts to procure orders from others to take this company to higher sales growth.
How are exports doing? Is the impact of recession still there?
The world is yet to recover from the global recession which impacted our exports business in the mining segment. The exports are yet to pick up. We are putting in our best efforts to garner business from the growing markets at potential geographical locations and we hope to do better business than 2009-10 fiscal during the current year.
Finance still seems to be a challenge BEML customers are both from institutional i.e., coal companies and the contractor segment. While the institutional customers generally do not need any financing, we are arranging finance to individual customers / contractors through our consortium banks and NBFCs who are into equipment financing, with whom we have entered into arrangements for BEML products.
To what do you attribute the success BEML has registered so far?
BEML's success is all attributable to the human resource and talent that the company has, which delivers all that is expected by the management. Organisat?ional restructuring, coupled with employee empowerment and right delegation, creating a sense of ownership resulting in responsibilities to deliver, have all proved to be the winning strategy. Management has shown the direction, the path and leadership and it is the people who have carved the way forward.
A-303, Navbharat
Estates,
Zakaria Bunder Road,
Sewri (West), Mumbai - 400 015,
Maharashtra, India
+91-22-24193000
Subscriber@ASAPPinfoGlobal.com