Defence PSU BEML formerly Bharat Earth Movers Limited) has chalked out an expansive plan to reap the benefits of acquiring West Bengal-based sick PSU, Mining and Allied Machinery Corporation (MAMC). BEML chairman and managing director VRS Natarajan has said the company could generate Rs 500 crore by developing business through MAMC alone in the next five years.
Recently BEML, through a consortium formed with government-owned Coal India Ltd and Damodar Valley Corporation, acquired MAMC for Rs 100 crore. BEML owns 48% in the acquired venture while Coal India and Damodar Valley hold 26% each. In fact, BEML is trying to raise its stake in the acquired company to 51%, Natarajan told FE.
MAMC, shut down two decades ago, was set up to produce underground mining equipment. The company, Natarajan said, has more than 1,400 machines, of which 800 can be operated immediately once the plant is cleaned up for operation.
Apart from underground mining equipment production plants, MAMC has facilities for oxidation, forging and casting. BEML buys Rs 300 crore worth steel and castings, Rs 30-40 crore worth oxidation and Rs 80 crore worth forgings every year for its various manufacturing facilities.
Post-acquisition BEML can save on spending on oxidation, forging and casting. BEML will also produce its own mining equipment in the acquired plant to cater to its eastern region customers, Natarajan said.
BEML believes the growing coal mining market in India and overseas would significantly push up the profit and revenue of its mining and construction equipment (MCE) business division.
According to M Poongavanam, director for mines and construction of BEML, the company has been earning a higher percentage of revenue from the MCE division every year, compared to defence and rail sectors. Of the total turnover of Rs 3,558 crore recorded in 2009-10, he said, around Rs 1,840 crore came from the MCE division.
For the current year, the company has set a turnover target of Rs 4,200 crore, of which around Rs 2,400 crore is expected to come from the MCE segment. In the next five years, Poongavanam said, the company would see Rs 4,500-crore revenue from the MCE division alone.
The bullish projection for the company?s MCE division comes in the wake of growing coal demand in India. With a rise in the number of power and steel plants, he said, the requirement for coal has gone up in recent years. Based on this, he said the Centre has allotted around 200 coal blocks in the last three years to various companies, including Reliance, Adani and Essar. Now the companies are in the process of developing coal blocks that would require large quantity of mining equipment, resulting in BEML getting a major chunk of the business.
Poongavanam also said revenue from MCE exports is expected to increase to Rs 1,000 crore in the next five years from Rs 101 crore in 2009-10. BEML has been exporting equipment to 55 countries while it is looking to add another 15 countries in the export list in the next five years. BEML, he said, has around 70% of market share in the institutional mining equipment business.