BEML to hive off its railway business

December 12th, 2011 - 2:17 pm ICT by IANS  

Chennai, Dec 12 (IANS) Hiving off its rail business into a separate subsidiary, setting up a unit in Indonesia and manufacturing engines for India’s main battle tanks are some of the plans on the list of mining and heavy equipment manufacturer BEML Ltd, said a top company official.

“With a business potential of around Rs.1 trillion in rail rolling stocks over the next 10 years, BEML is planning to hive off its rail business into a separate subsidiary for greater focus next fiscal,” chairman and managing director V.R.S. Natarajan told reporters here Sunday.

BEML is the only Indian company rolling out Metro rail cars. The company is supplying rolling stocks for the Delhi Metro and Bangalore Metro.

“The division will close this year with a revenue of around Rs.1,500 crore, up from Rs.1,300 crore last year. Over the next five years, the turnover is expected to touch around Rs.3,000 crore,” he added.

According to Natarajan, aluminium cargo wagons also offer good potential once the high speed rail corridor comes into play.

With the Indonesian market turning out attractive for its mining equipments, BEML is mulling an assembly unit there.

“We have supplied mining equipments worth Rs.150 crore for mines in Indonesia and have pending orders worth Rs.125 crore. Till date, we have supplied around 20 units to Indonesia and once the numbers touch 100 units, a facility for assembling dumpers, bulldozers, excavators and others will be set up,” Natarajan said.

He said the company is setting up a spares depot and services centre in Indonesia and assembly unit is an extension once the market grows for its machines. “We expect to touch the 100 units next year,” he added.

According to Natarajan, the company is in the process of appointing dealers in China.

With coal mining companies like Coal India going in for high capacity dumpers - over 200 tonne - BEML is in talks with an overseas company for technology transfer to make such equipments.

Queried about the increasing competition in the small construction equipment segment like backhoe loaders where BEML does not have a major presence, he said: “We may source and assemble the systems instead of manufacturing the entire machine.

“That segment is a high volume and low margin business. Companies will not make profit as the owners would not go for original parts after the initial sales.”

BEML is also planning to make battle tank engines and transmissions for India’s main battle tank Arjun while talks are on with a foreign firm for building and supplying 155 mm, 52 calibre tracked gun.

Natarajan said the company is building a new facility for making components for aerospace sector in Mysore in Karnataka.

He said BEML will be supplying five dredgers to Bangladesh as part of line of credit extend by India to that country. BEML has tied up with Vostra of Holland for manufacturing dredgers.

With an order book size of Rs.6,500 crore to be executed over the next year, Natarajan said BEML would close this fiscal with a turnover of Rs.4,500 crore.

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