BEML Ltd, a mini-ratna PSU that was more into mining, construction equipment and defence-related business, is now eying a major share in the rail and metro sector. The company has supplied metro cars to the newly launched Bangalore Metro Rail and the Delhi Metro. It also has been expanding its other businesses like aerospace. BEML?s chairman and managing director VRS Natarajan discusses the company?s future plans with FE?s Jaishankar Jayaramiah. Excerpts:
What kinds of opportunities do you see in the metro coach business?
The company had identified the business potential of metro rail when the concept of metro transportation system was still at a nascent stage in India. The company has taken proactive steps to acquire technology for state-of-the-art metro coaches from South Korea-based train-maker Rotem and established the necessary manufacturing infrastructure at its Bangalore complex. The company’s rail and metro business increased by 31% year-on-year to Rs 1,331 crore in 2010-11. In addition to metropolitan cities, even tier-II cities like Ludhiana and Kochi are also going to have metro network operations. In this background, BEML has every chance of getting a major share of the metro coach business in India.
Can you throw more light on your business related to the Bangalore metro network?
The company got an order of R1,672 crore to supply 150 car sets to the Bangalore Metro Rail Corporation (BMRC). So far it has supplied 51 cars while the remaining 99 units will be delivered before December 2012. There are indications that the company may get another R1,000-crore order from the Bangalore metro to supply 90 car sets in the near future. Further, the Bangalore metro is expected to upgrade its three-car train sets to five cars or seven cars owing to the growing population and the expansion of city limits. If the Bangalore metro upgrades the train with five cars, BEML will get an order worth R1,000 crore for supplying around 100 intermediate cars.
Are you expecting further orders from the Delhi Metro?
BEML had supplied 196 metro cars valued at R1,367 crore to the Delhi Metro Rail Corporation. Subsequently it asked for intermediate cars to upgrade the four-car train set to a six-car one. As it is satisfied with our intermediate cars, Delhi metro has further ordered 136 cars on a nomination basis, which would add a revenue of R925 crore to the company. We are in the process of executing the order. The Delhi metro has already taken a policy decision to move from six cars to eight cars. If that happens, we will get another R1,000-crore order to supply around 140 cars by the next year or so.
What kinds of steps have you taken to strengthen the metro rail technology?
When we started the metro rail business, our local content remained in the range of 17%. Today, we have increased the local content level in our metro cars to up to 52%. In the next three-five years, the indigenous level could be increased to 65-70%. We have a 15-year tie-up with Rotem for technology to develop products for both broad and standard gauges. We are also working with Mitsubishi Corporation for purchasing propulsion. Bogies, wheel-set and propulsion are three major products pushing up the metro rail cost. We are trying to manufacture bogies in India and will achieve it in a year or two. We are in talks with other PSUs like HEC and SAIL to manufacture and supply the wheel set required for the metro.
Do you think we can reduce the cost of such metro rail projects?
We are now in the process of manufacturing affordable metro coaches. The affordable car is expected to be cheaper by R1 crore per unit compared to the current price level of R8-9 crore excluding taxes. If this happens, BEML?s metro car will be the cheapest in the world.
Can you elaborate on your expansion plans at the plant?
Our metro car production capacity at the Bangalore factory stands in the range of 15 cars per month. Currently we are in the process of manufacturing one car per day. We are expected to achieve it in the next six months. So we will be comfortable to work for three metro projects simultaneously. Already we have invested R350 crore at our Bangalore complex to manufacture metro coaches. Another R100-150 crore will be invested in the next one-two years.
What is the share of metro business in the company?s total turnover?
Our aim is to get one-third of the company’s business from the rail and metro sector. Last year, the rail and metro sector contributed 23% of the total revenue, of which metro business alone stood in the range of 19-20%. In the next three years, we are expected to increase the share of our rail and metro business to 33%.
