The Hindu Business Line : BEML bets big on components biz

Chennai, Oct. 5 BEML Ltd, the public sector heavy equipment major, which is putting up a greenfield plant at Palakkad, Kerala, expects the upcoming unit to give the company a leg-up in the lucrative spare parts business. At Palakkad, the company intends to produce spares for both metro rail and aerospace industries.

BEML’s Chairman and Managing Director, Mr V RS Natarajan told Business Line recently that the company will focus on exports of spare parts for metro rails. “We are looking at whether these parts can be produced to suit the design of global players such as Bombardier, Alstom and Siemens,” he said.

BEML seems to have been inspired by a Chinese company called Ultimate Transport. “It is a small company, which supplies parts to all the MNCs in the world. We are trying to replicate that model,” Mr Natarajan said. He said BEML could manufacture products such as side walls, end walls and undertrain components. A small beginning was made last year, when the company earned Rs 75 crore from exports of rail spare parts.

At Palakkad, the company is investing Rs 260 crore to create facilities to cater to rail, metro rail and defence sectors.

Aerospace ventures

BEML also intends to get into manufacturing of components for the aviation industry, especially or defence airplanes.

Last year, BEML created a design centre in its ‘technology division’ that would provide design services for the aerospace industry. Recently, the design centre was approved by the Centre for Military Airworthiness and Certification (CEMILAC) and accordingly, can provide design services using CAD, CAM and CAE.

BEML’s intention is to extend this into manufacture also. “We can design, we can also manufacture,” Mr Natarajan said. “We are decisively moving towards getting certification for manufacture of parts for the aerospace industry too,” he said.

For starters, it has invested Rs 10 crore to do up its facilities, but Mr Natarajan said that the company would keep injecting funds “as we go along”.

BEML aims at the business arising out of the offset clauses in defence purchase contracts that obligates overseas suppliers of defence equipment to in-source at least 30 per cent of the value of their supply from India. As a public sector company under the Ministry of Defence, Mr Natarajan sees BEML as a preferred vendor of components.

Defence range

In his address to BEML shareholders last month, he said that India’s Defence budget is Rs 1.34 lakh crore and the company would “expand its Defence range” to capture business. He said the company plans to manufacture diesel engines also for defence vehicles.

Defence today contributes 20 per cent to the company turnover of Rs 3,000 crore.

Mr Natarajan was here last week to deliver a speech at the Meenakshi Sundararajan School of Management here. He said in his speech that BEML was working towards a turnover of Rs 5,000 crore by 2014, its Golden Jubilee year.

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