BEML expects defence revenue to reach Rs 4,500-5,000 crore in 4-5 years

BEML Ltd, a diversified public sector company supplying products, services and support to many sectors, including construction, railway, defence, aerospace, mining etc., expects its revenue from defence segment to go up significantly in the next five years. 

Sharing some key insights about the company's performance and future prospects with CNBC-TV18, BEML Chairman and Managing Director Shantanu Roy said that the company expects its defence revenue to reach an impressive number of at least Rs 4,500 in the next 4 to 5 years.

“We expect that the defence order book at one stage will reach around Rs 7,000-8,000 crore in next 7-8 years and with that defence revenue can reach somewhere between Rs 4,500 crore and Rs 5,000 crore by that period from now,” he said.

This projection reflects BEML's commitment to expanding its presence in the defence sector, a move that aligns with the Indian government's emphasis on domestic manufacturing and self-reliance in defence equipment.

BEML, formerly known as Bharat Earth Movers Limited, has long been a key player in the Indian heavy equipment manufacturing sector. Established in May 1964, this Indian public sector undertaking has been instrumental in the production of a wide range of heavy machinery, including equipment for earth moving, rail coaches, spare parts, and mining equipment. With its headquarters located in the tech hub of Bangalore, BEML has grown to become Asia's second-largest manufacturer of earth moving equipment.

While the first quarter of the current fiscal year witnessed a decline in BEML's consolidated revenue, there was encouraging news as well. The losses narrowed during this period, signaling that the company is making efforts to improve its financial health. This suggests that BEML is actively working on cost optimisation and revenue enhancement strategies.

Another noteworthy update from the CMD Shantanu Roy was that the company has recently received the order worth Rs 3,100 crore for Bangalore Metro, which takes the company’s current order book to Rs 12,800 crore. In the remaining period upto March 2024, BEML expects to have Rs 7,000-9,000 crore worth of orders. So the company is expected to end FY24 with the order book of at least Rs 17,000 crore.

This upward revision indicates that BEML is securing significant orders, which bodes well for its future performance and growth prospects.

Shantanu Roy also addressed the issue of employee costs, stating that they accounted for 36 percent of revenue in the first quarter. However, BEML aims to maintain employee costs at around 20 percent of revenue. This strategy is designed to enhance operational efficiency and ensure sustainable profitability. It is projected that by the fiscal year 2024, employee costs should be at or slightly lower than 20 percent of revenue.

BEML is also investing in its future growth through capital expenditure (Capex). The implementation of current Capex is expected to take 12-15 months, with the positive outcomes becoming visible in the fiscal years 2025-26.

“The Capex number that we have decided to infuse this year is around 5 percent of our last year’s revenue,” he said.

BEML posted a revenue of Rs 3839.19 crore for the financial year 2022-23.