BEML reveals 9 bn expansion plan
Monday, 25 June 2007, 07:00 Hrs
Kolkata: A defence production unit that manufactures earthmoving equipment, as also Metro Rail coaches, will invest 9 billion in the next three years for restructuring, expanding and diversifying its operations. "Around 450 crore (4.5 billion) of the total will come from a public issue and the rest from company's internal resources," said V.R.S. Natarajan, chairman and managing director of Bharat Earth Movers Ltd (BEML) said at a function here at which the company made its foray into the lubrication oil business. BEML's follow-on public issue of 4.9 million equity shares of 10 each will open on June 27 and close on July 3, with the price band is yet to be announced. The company is the second largest manufacturer of earthmoving equipment in Asia and commands 70 percent market share at home. Natarajan said the BEML engine oil would be blended by Silvassa-based Nandan Petrochemicals Ltd and sold under company's own brand name. "We are expecting a business of 1 billion in next three years from the BEML Oil," he said. Coal India Limited (CIL) chairman and managing director Partha S. Bhattacharya, who officially inaugurated the BEML Oil launch, said if BEML can capture 20 percent of CIL's total demand of lubricating oil, it will mean a huge business for the company. In 2006-07 CIL brought 412,000 kl of lubricating oil spending 15 billion, Bhattacharya said. BEML, a 'mini-ratna' company under ministry of defence, covers 38 countries in Asia, Africa, Europe and Latin America. The company has two overseas offices in China and Singapore to support export tie-ups and business outsourcing in the global market. Nine public sector undertakings (PSU) in India - IOC, ONGC, GAIL, BPCL, HPCL, BHEL, MTNL, NTPC and SAIL - enjoy enhanced financial and operational autonomy under the status of 'Navratana'. Two defence units, including BMEL, have a 'mini ratna' status - just a step below Navratna. The 'mini ratna' status means the PSU gets a certain amount of autonomy with regard to capital expenditure, establishing joint venture companies, entering into transfer of technology (ToT) agreements and implementation of schemes relating to human resource management. Unfolding future investment plans for metro coaches, BEML director (rail and metro division) N.K. Sreenivasan said the company has already earmarked about 2.4 billion for next couple of years to increase the production capacity of metro coaches in its Karnataka unit. "BEML has borrowed latest technology from South Korean company, Rotem, in manufacturing hi-tech metro coaches. We are aiming to increase our production from 200 coaches to 350 coaches per annum," Sreenivasan said. BEML, as a part of company's Vision-20013 plan, is also targeting to achieve a turnover of 50 billion by the end of 2013-14. BEML's present market capitalisation is in excess of 40 billion.