BEL is well positioned to address the upcoming defence and security business opportunities: S.K. Sharma

SP’s ShowNews (SP’s): BEL has crossed the 6,000- crore turnover milestone. With the opening up of the defence sector and armed forces modernisation, what is the turnover target BEL is looking at by 2020?

Sharma: With private participation gaining momentum in defence business and increasing competition, BEL is facing several challenges requiring excellence in all areas of business including R&D, marketing, supply chain management, modernisation, project execution and talent development.

Also, with the enhanced thrust of the Government on indigenisation, BEL is looking at deeper engagement with DRDO and innovative ways to address the market requirements through suitable models like collaborative R&D with technology companies, PPP, Joint ventures and consortia.

BEL is well positioned to address the upcoming defence and security business opportunities and also will diversify into select non-defence areas. Based on the addressable business opportunity and projects in the pipeline we are aiming to achieve 10,000 crore sales turnover in about four years’ time. A longer- term estimate would be much dependent on some of the large programmes taking shape and the proposed modernisation drive of the armed forces.

SP’s: Which segments of the company will be the major revenue drivers in the years to come?

Sharma: The major business opportunities for growth will be in Weapon Systems, Next Generation AESA-based Radars, Electronic Warfare, Network Centric Systems, Electro-Optics and Offsets.

SP’s: The export turnover of BEL decreased in 2012-13 from the previous year. What are the reasons for this and what is the trend for 2013-14?

Sharma: The decline in export sales during the year 2012-13 was mainly due to two reasons. One, the Low Level Transportable Radar (LLTR) energy system planned under offset programme was later considered as domestic sales and two, some of the products and systems planned for order acquisition and despatch did not materialise during that year.

BEL’s export target for the year 2013-14 is $40 million up 20 per cent from last year and we are making all efforts to achieve this target.

SP’s: What is the size of the defence electronics market in India and how is BEL placed in the market?

Sharma: The production of strategic electronics in the country has been growing steadily to keep pace with the demand and has increased from 5,700 crore in 2007-08 to 9,000 crore (estimated) in 2012-13 and is projected to cross 10,000 crore during the current year.

The share of BEL in the Strategic Electronics sector for the year 2012-13 was about 57 per cent and is expected to increase in the coming years.

SP’s: How much of it (defence electronics market) comes from indigenous sourcing?

Sharma: As per the report of the Working Group on Defence Equipment for the Twelfth Five Year Plan, on an average, indigenous outsourcing of DPSUs has been about 25 per cent of their turnover.

In the case of BEL, the indigenous content as a percentage of value of production for the year 2012-13 is about 60 per cent.

SP’s: Could you indicate how BEL has benefited from offset obligations?

Sharma: Offsets have opened a new business opportunity for BEL. The offset business has been a learning experience for handling international contracts and streamlining of internal processes. It has also helped in the upgradation of our infrastructure to cater to the requirements of OEMs. It has enabled industrial cooperation for newer technologies with global OEMs; helped in forging new partnerships and in synergising internal quality system initiatives to meet the customer’s requirements. It has also resulted in capability enhancement for avionics products/systems and an opportunity for new product development.

SP’s: What is the progress on the joint venture with Thales on development of radars?

Sharma: Approval from the Foreign Investment Promotion Board (FIPB) for Foreign Direct Investment (FDI) by Thales and the Government’s approval for the formation of the JVC have been obtained. The registration and incorporation of the Joint Venture Company is under way. We hope to establish the JVC in about six months’ time.

SP’s: Could you give an update on Akash Weapon system and the Battlefield Surveillance System (BSS), as to when they will be inducted?

Sharma: BEL is executing the Akash Weapon System orders from the Indian Air Force. Supply of the initial systems has been completed. These systems are progressively being inducted.

BEL is supplying Radars, Control Centres, Simulators and other support systems as well as carrying out the System Integration as part of its workshare of the Akash Weapon System for Army. User evaluation as per trial directives is in progress. Firing trials are scheduled in due course.

Operational requirements and functional aspects of Battlefield Surveillance System have been identified in association with the user. Application software development is under progress as per the stage-wise schedule. The first off production versions (Plains and Desert) is planned to be fielded during the year 2014-15.

SP’s: BEL is expanding its non-defence business. How much does it account for in the total turnover presently? What kind of synergies has been developed between defence and non-defence businesses?

Sharma: Presently, the non-defence business accounts for 15 to 20 per cent of the total turnover of the company. In 2012-13, 15 per cent of BEL’s turnover registered from non-defence businesses like Tablet PC, e-Census, Biometrics generation for National Population Register, Electronic Voting Machines and components for power switching, solar and medical electronics.

Leveraging its capabilities and strengths in the defence business, BEL is pursuing new business opportunities allied to its core business.

A separate group has been formed in the Bengaluru factory to address the Homeland Security (HLS) market. Products like X-Ray Baggage Inspection System (X-BIS), Under Carriage Vehicle Inspection System (UCVIS) and Video Analytic Software Modules which are required for HLS applications, have been developed in-house.

An integrated Security solution test bed is being established at our Bengaluru and Ghaziabad factories to showcase our capabilities. BEL has successfully executed a Campus Surveillance project for IAF in Bengaluru. BEL has also expressed its interest to participate in many HLS projects for Government/ defence establishments.