VAYU : BEL has been recognised by Economic Times as the ET Iconic Brand of India (2022). How do you see this award?
I see this prestigious award as recognition of the iconic status that Brand BEL enjoys as the country’s premier professional electronics company. BEL is India’s pioneer in defence electronics. Today, there’s not an area in defence which is untouched by BEL — radars, missile systems, military communications, naval systems, electronic warfare and avionics, C4I systems, electro optics, tank electronics and gun/ weapon system upgrades, electronic fuzes, you name it, the company has made some of the most iconic products in all these areas. It is also recognition for the complete trust that customers have reposed in BEL. And like all good brands, BEL has been constantly evolving over the last seven decades and has been diversifying into allied areas of non-defence to keep pace with the changing times.
VAYU : Can you please tell us about your performance for FY 2021-22?
FY 2021-22 saw an impressive performance by BEL with the company registering a record turnover of Rs. 15,044 Cr, and turnover and profit witnessing a strong Year-on-Year growth of 9% and 14%, respectively. This, despite challenges posed by the pandemic, global chip shortage and stiff competition. This has instilled confidence among stakeholders, resulting in the highest PE ratio of 29 of BEL’s share price among all manufacturing PSUs. The Company recorded an export turnover of 33.30 million USD and become the first defence PSU to cross the landmark market capitalisation figure of Rs.80,000 crores and declaring the highest ever dividend of 450%. On my part, I have steered the Board, Administrative Ministry and Shareholders’ approval to increase the authorised capital three-fold to Rs.750 Cr and issue of bonus shares in the ratio 2:1.
VAYU : What were the key contributors to such a stellar performance?
The growth in turnover during FY22 was mainly on account of timely execution of the existing order book as well as new products introduced in the current FY. The major orders executed during FY22 were Long Range Surface-to-Air Missile (LRSAM), Air Defence Weapon System, Integrated Air Command and Control System, AFNET, Coastal Surveillance System Phase II, Integrated Perimeter Security Solution, Smart City projects, Oxygen Concentrators and Ventilators. New products introduced include Laser Fence System, IR Jammer for Active Tank Protection System, Solid State Power Controller Cards for Akash NG/QRSAM, S-Band 150 W Power Amplifier, GNSS Receiver and IP EPABX System. As far as profitability growth in the current year is concerned, increase in turnover as compared to the previous year was to the tune of more than Rs. 1,200 Cr, which has brought in economies of scale and corresponding increase in profit.
VAYU : What is your turnover projection for FY 2022-23? What is the order inflow this year?
We are midway into meeting our targets for this financial year and I am confident that we will achieve around 15% growth in our turnover and increase in EBIDTA (as a per cent of turnover) from the present 22% to 23% by the end of March 2023. BEL’s order book as on 1 April 2022 stood at Rs. 57,000 Cr. This year, we are expecting around 15,000-20,000 crores worth orders. What are your top strategic priorities? BEL’s investment in R&D during the current FY has been to the tune of over Rs. 1,000 Crores (7% of its turnover). We have also been investing every year more than Rs. 500 Crores in Capital. Going forward, we would like to maintain the same level of investment in both R&D and Capital, which will help us develop new products, indigenise, bring about design change and achieve cost reduction. This will aid in creating new avenues of growth, reduce costs and increase our profitability.
VAYU : What is the growth potential from export markets? How are you planning to expand your presence abroad?
We are seeing a very good opportunity in exports. Our present export order book is more than USD 265 million. During the current FY, as part of its offset commitments, under the prestigious C295 aircraft programme, Airbus Defence and Space has signed a contract with BEL for the manufacture and supply of Radar Warning Receiver and Missile Approach Warning System. To enhance its geostrategic reach, BEL has strategically opened overseas marketing offices in the Indian Ocean Region, South East Asia, Middle East Region and USA. BEL has six overseas marketing offices in Vietnam, Myanmar, Sri Lanka, Oman, Singapore and New York, and is planning to further expand its global footprints.
VAYU : Tell us about your initiatives to diversify into the civilian business...
Defence, being the mainstay of BEL, has traditionally been contributing to around 80% on an average of the company’s annual sales revenue. BEL, however, has been continuously exploring diversification into allied defence and non-defence areas. The total opportunity available in the nondefence business segment, being pursued by BEL in the next 8-10 years, is more than Rs. 2 Lakh Crores. The company aims to increase its non-defence share in the overall business in the coming years. Some of the areas BEL is focussing on in non-defence include solutions for Civil Aviation sector including air traffic controller radars, anti-drone systems, space/satellite electronics, space launch vehicles, satellite communication services, spacegrade solar cells, satellite assembly and integration, solar business, railway and metro solutions, software as a service, network and cyber security, energy storage products for electric vehicles (Li-ion & fuel cells, charging stations, etc), homeland security and smart city businesses, smart meters, a range of medical electronic and health care solutions. BEL is entering into partnerships with various OEMs/ technology solution providers to expand the business in the identified non-defence business segments. This wide bouquet of businesses in non-defence would play a key role in driving BEL’s growth in the coming years.
VAYU : In recent years, the Government of India has stressed on the need to involve the MSMEs, private industry and startups in the defence sector. What are BEL’s initiatives to promote such initiatives?
The defence sector has been opened up for private sector participation with the evolution of Defence Procurement Procedure. In this changing business scenario, BEL is focusing on enhancing interactions at various levels and building long-term relationships with customers, emerging Strategic Partners and other key stakeholders in the Indian Defence industry as a trusted and committed partner. Be it the efforts that the company has been putting in to engage in collaborative R&D in addition to augmenting its own R&D set up — its recent attempts to outsource work to Indian private industries and MSMEs, or the path breaking decision to go in for Public-Private partnerships to execute turnkey projects, BEL is leaving no stone unturned to ensure that it is in sync with the Government’s larger goal of indigenisation and self-reliance. BEL has formulated a long-term Outsourcing and Vendor Development Policy and has been taking several initiatives in order to broaden the domestic vendor base by implementing online vendor registration and e-procurement processes including using GeM portal. This is in line with the ‘Make in India’ initiative where enhanced thrust has to be put to develop domestic players. BEL has also made provisions for entering into Long Term Agreements (LTAs) with reputed vendors with an objective to secure the supply of items or services over a specified period of time as per mutually agreed terms and conditions. BEL has identified several areas for partnership with start-ups in new emerging technology areas in both defence and non-defence businesses through various engagement models. Defence Innovation Organisation (DIO) is a Section-8 company, created jointly by BEL and HAL to support the country in building an eco system of entrepreneurship and innovation in defence in India by implementing the iDEX framework. The Company is also working on emerging technologies such as Artificial Intelligence, Big Data Analytics, Internet of Things, 5G Wireless Communication, Robotics & Computer Vision, Augmented & Virtual Reality, Quantum Cryptography, etc, under R&D collaboration with industry, academia and start-ups.
