We recently met the management of BEML. Robust revenue growth in mining segment (~58% of revenues) — Coal India’s target of doubling its production to ~1bn tonnes (15% CAGR) in next five years — would mandate higher investments in commercial vehicles and heavy equipment.
Coal India, in its commentary, has stated its intent to spend R1,500-2,000 crore annually on machinery procurement including heavy equipment, dumpers, etc — segments where BEML is the market leader.
BEML is focussing to generate higher revenues from spares and parts (~27% of total revenues) – typically a higher-margin business. BEML has the prequalification to supply spares and parts to Coal India.
BEML has a strong order backlog of R2,300 crore in the Metro segment, which indicates 100% utilisation for the existing capacity till FY18. BEML is well placed to receive Metro orders in Delhi/Kolkata/Jaipur/Bangalore metro project given its expertise and experience in the space.
BEML is also exploring manufacture of medium speed trains — a focus area for the incumbent railway minister.
The approval for Tatra trucks has come through with delivery commencing from August 2015. The order backlog of R1,100-1,200 crore from Tatra is likely to get executed in 18-24 months.