The Hindu Business Line : BEML hitches ride on the mining boom

The defence PSU’s M&C business – its traditional focus - has grown 10 per cent over the last year to nearly Rs 1,800 crore and is poised to grow further with contract mining, Mr V.R.S. Natarajan, told a news conference.

Ironically the mining and the rail businesses have outgrown the company’s core defence segment, leaving it behind at Rs 765 crore, with an equivalent order book.

Tapping potential

Mr Natarajan said the mine blocks allocated to some 80-100 public entities including State Governments, electricity boards and power corporations were waiting to be tapped. “The States are asking us to enter joint ventures with them and take over the mines. We are working with some of them and hope to have 2-3 [blocks coming to its joint venture with Midwest] by 2009. It will be a win-win scene for both of us and it will mean a 30-year business along with equipment sales from BEML. This is a huge opportunity to leverage our growth.”

A 2007 McKinsey report on the Indian earth moving industry, he said, has forecast a six-fold growth in the equipment business, from $ 2.3 billion (Rs 9600 crore) to swell to $ 15 billion (around Rs 60,000 crore) by 2015. The spur would be contract mining.

It had also signed an MoU with SAIL to supply mining equipment worth Rs 400 crore for three years, including a maintenance and repair contract (MARC).

The same MARC model would be replicated for coal and other contracts.

Its strategy of having 21 mining equipment dealers across the country had paid off with sales of Rs 275 crore for 717 equipment, almost doubling sales year on year. BEML was also diversifying into high capacity dumpers, rope shovels and pushing sales of loaders, small excavators and dozers.

Growth area

The rail and metro business, its second growth area, grew 159 per cent to Rs 272 crore and has an order books at Rs 1700 crore. The Delhi Metro Rail Corporation has placed a Rs 1366-crore order for 192 coaches.

BEML has forayed into railway spares with orders worth Rs 102 crore.

“We are bullish on the metro rail sector and expect to be supplying for the Bangalore, Mumbai, Kochi and Hyderabad projects. We expect the rail business to touch Rs 500 crore this year,” Mr Natarajan said.

BEML which already makes the Tatra trucks for the armed forces has now taken over the tipper business from Tatra Vectra, Hosur, and will make and sell the `Hemang’ brand of tippers and engines from its Mysore facility – which contributes 25 per cent of the turnover.

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