We are targeting a total offsets business of $300 million in the next 3 to 5 years.
If these are tough times to be in any business, it is tougher to be in the fiercely-fought military business; more so if you are a Government-owned enterprise. These days, players like Bharat Electronics Ltd are facing stiff competition in the hitherto assured domestic market — from trans-national companies and a growing breed of Indian private sector industries.
BEL's Chairman and Managing Director, Mr Anil Kumar, who took charge in October last year , gives a glimpse of how the listed defence electronics major (in its fifth decade) is poised to combat the challenging times. Excerpts:
What is the big picture for BEL? What is being done to take the company to the next level in performance, products and global play?
Our plan is that, by 2020 we should be a Rs 25,000-crore company. BEL will address the businesses of missiles, radars, C4I (command, control, computing, communication and intelligence equipment or network-centric systems), besides electronic warfare and homeland security.
We are pursuing the C4I in the three Forces. Our market research consultant has identified nuclear power, homeland security and railways as our future growth areas. We will give a good push to homeland security. We have shifted this business to Bangalore.
Future wars will be fought at night. So we want to go in a big way with [night vision or] thermal imaging devicesand may manufacture detectors. It could mean an investment of Rs 1,000 crore.
A major project we have taken up is the Software Defined Radio. The Forces' requirement will be a lakh or so radios.
What type of investment will happen under the 2020 plan?
Over the next 4-5 years, we will be spending Rs 2,500-3,000 crore on infrastructure and acquiring new technologies. The focus will be on developing our technologies. If there is still a gap, we will acquire it by partnering with DRDO and other suitable partners.
What is the current financial outlook for BEL? Which business prospects are you looking forward to?
For fiscal 2012, we are looking at a turnover target of Rs 6,200 crore-plus. The profit should be around Rs 1,200 crore-plus if a few pending projects happen — such as the DRTS (Digital Radio Trunking System) and the modified Lorros mast (for surveillance).
Before the end of March we expect an order for 30 Weapon Locating Radars. There is an order for 29 of 3D tactical radars.
We will be spending Rs 250-300 crore this year. Next year, our capital expenditure can go up to Rs 350-400 crore. We have several modernisation plans. We are looking for technology for uncooled detectors initially. We want to expand facilities at Machilipatnam for night vision devices.
What will BEL make for homeland security?
BEL has developed the coastal surveillance system for the Coast Guard. This business will include X-ray machines, baggage and cargo scanners, under-vehicle inspection, face detection and recognition and number plate readers.
How is your civil sector business doing?
Our civilian business is growing in revenue but as a part of the total turnover, it is still only about 15 to 20 per cent. The electronic voting machine has been very successful. The Election Commission has asked us to include a printing facility to allow for a manual audit. We designed a tablet PC in record four months for the Ministry of Rural Development and delivered six lakh tablets in six months.We are upgrading its processing speed.. Smart card is another new area.
What is BEL's offsets opportunity from ongoing or impending military purchases?
BEL is targeting a total offset business of $300 million (around Rs 1,500 crore) in the next 3 to 5 years. Its share in the overall offsets business could be around eight per cent. So far, 80 per cent value of (proposed) acquisitions is for air platforms. Our share may improve when RFPs are issued in (non-aerospace) areas such as Naval platforms, gun programmes, radar and missile systems.
How do you view the increasing competition from the private sector and MNCs?
The private sector is generating healthy competition. The defence business requires patience, perseverance and staying power. We have been there for a long time now and will continue to be there. The private sector asks for a level playing field, but a level field has to be totally uniform in all spheres and all Government stipulations that apply to us should also be applicable to them. Actually, we take quite a 30-35 per cent of supplies by order value from the private sector. The private sector can be partners with us in large programmes.