Order Book is about Rs.50,000 crore - M V Gowtama, CMD, Bharat Electronics Limited

What is the status of your order book? What kind of revenue you are expecting in the next three years?

CMD - Order Book as on end January 2019 is about Rs.50,000 crore. Defence segment continues to be BEL’s main business and provides close to 80 per cent of revenues. We are anticipating revenue growth in the range of 12 to 15 per cent.

Tell us about your expansion plans. What is the status of your seeker plant in Anantapur and electronic plant in Machilipatnam?

CMD - BEL invests a substantial amount in expansion and modernisation of its facilities. BEL plans to spend around Rs 2,500 Crores in the next 3-4 years.

The Defence Systems Integration Complex at Palasamudram, in Ananthapur district of Andhra Pradesh, will be the largest facility in the country once it is commissioned, covering an area of over 900 acres. The facility will enable BEL to expand its Missile Systems business and to carry out manufacturing and integration of systems and sub-systems for upcoming projects. The facility will be built in 3 to 4 phases, as various projects mature with an estimated investment of about Rs.500 Crores over the next 2-3 years with the first phase in progress.

The Nimmaluru plant (near Machilipatnam) will make IR seekers, Night Vision devices and Thermal Imaging cameras with an investment of about Rs.250 Crore. The plant is expected to be operational in the next 2 years.

BEL is acquiring land at High tech Defence & Aerospace Park at Devanahalli for pursuing business in areas like Satellite Integration, Space Electronics, Unmanned Systems, etc.

At the core of indigenisation in defence is expenditure in R&D, what are your ongoing projects and the per cent of revenue is spent on R&D?

CMD - Some of the major developments initiated are Next generation Weapon Systems, Smart elements of Homeland Security (HLS), IR Seekers, Command Control software, On-the-move Satcom with low profile Antenna, Satcom Manpack terminal, Electronic Sub-Systems for Twin Barrel 30 mm AD Gun, Advanced system for Identification of Friend & Foe for Weapon Systems, Upgraded Voice Control and Communication systems, Coastal Situation Awareness Radar, Ultra light-weight shelter and modular High Altitude Shelters.

BEL is continuously investing 8-10 per cent of its turnover in R&D on a year-on-year basis. The Chief Technology Officers appointed by BEL for major technology domains are driving the technology/product development efforts in their respective segments. BEL has also given more thrust to its collaborative R&D efforts with more partners being roped in for development of technology modules/products.

Could you please apprise us on the status of major projects like Akash, LRSAM, QRSAM etc?

CMD - For Akash Mk2 project, DRDO is discussing with Users for finalising quality requirements.

In case of LRSAM project, BEL has received the orders for 11 numbers from GRSE and MDL for P15B and P17A class of ships. BEL has also entered into a work-share agreement with IAI Israel for executing the order. Presently, manufacturing is under progress at BEL and IAI and 1st System is planned for dispatch by March 2020. QRSAM is under development with various labs of DRDO.

As the defence industry is witnessing the arrival of new technologies like AI, robotics etc, what are BEL’s plan to acquire capabilities in these areas?

CMD - BEL is working on the new technology areas like AI, IOT, Robotics, Big Data Analytics, Cyber Security, etc. In some cases, BEL has launched in-house projects and in certain cases, BEL is working in a collaborative mode with Start-ups.

How has been your experience with Offset programme? In what ways has it helped or improved BEL’s capabilities?

CMD - Offset programme has offered not only more business to BEL but also more opportunities to build world-class capabilities, improve technical know-how for self-sustainability, open new dimensions for indigenous research and development, to be part of supply chain of big global players increasing BEL Brand value and global outreach, bringing more partners for collaboration to enhance the technical skills as well as cutting down the cost and time required for the production by making the technology available in India itself. However offset generated opportunities have also intensified competition between various Indian companies and it has made it a necessity for BEL to develop and maintain skill, talent and competency on par with global trends and demands.

What is your reading of the SME sector in defence? Have they been improving their technological capabilities? Are they in sync with the future requirements of the OEMs?

CMD - The Indian MSME sector has emerged as a highly vibrant and dynamic sector of the Indian economy, acting complementarily to the large industries as ancillary units. The sector has the potential to spread industrial growth across the country and can be a major partner in the process of inclusive growth. The Make-in-India campaign adds a new dimension to the indigenisation programmes in the Indian Defence sector and increases the relevance of MSMEs manifold. The Government of India, through its various agencies, has taken many key steps to strengthen the MSME sector and promote innovation and capacity building in this sector.

MSME has been improving the technological capabilities and BEL has initiated collaborative R&D with some of the niche technology companies which include several MSMEs. BEL has developed successfully several technology modules/sub-systems with the help of MSMEs. They are moving up the value chain and in near future, they will be complemented by designing their own sub-systems, modules, services for Defence forces.

There are many start-ups in the country which have successfully developed products like Drones, Night Vision Equipment, Communication equipment, etc for Defence applications.

Would you like to participate (if allowed) in the SP model as OEM?

CMD - Strategic Partnership model (SP) is for Platform manufacturing for the Indian private sector. As part of DPP 2016, the Government has plans to identify strategic partners from private industry to participate in big purchases under ‘Buy and Make’ category acquisitions. BEL will work in collaboration with all the Platform manufacturers for their requirements of defence electronics.

Could you tell us about some of the areas where BEL is making efforts to acquire design and development capabilities?

CMD - Apart from its core business segments, BEL has also initiated development programs to acquire capabilities in the emerging technology areas like AI, Robotics, UAVs, Fuel Cells, LiFi, etc. 

Why DPSUs have not been able to reverse engineer license manufactured weapons?

CMD - Licensed manufacturing is bound by Agreements, IPRs, Government policies and norms, hence such items cannot be reverse engineered. However, based on the Agreements, indigenous efforts are being made to reduce the cost and provide better service to the customers on a long term basis.

What is your assessment of the Make in India in defence? Are we on the track to reverse the import-export trend in defence?

CMD - Presently, India is the largest importer of defence equipment with many of its defence needs met through imports. The vision of the Government of India is to develop a strong self-reliant domestic industry in the defence sector with substantial participation from Private sector including MSMEs and Start-ups to reverse the trend of imports. In this regard, the Government has taken several initiatives to enable this vision like the Make in India program, setting up of two defence industrial production corridors, Strategic Partnership model (SP), relaxation of FDI norms, setting up of Defence Innovation Organisation (DIO), etc. With all these initiatives, defence imports are likely to reduce in the near future.

What are your export plans? Tell us about your areas of interest for export?

CMD - BEL has a dedicated International marketing Division for providing an increased thrust for harnessing the export potential of defence electronics products and systems, which represent its core area of business.

BEL has identified the key market segments for exports and has a structured market plan for its products and systems. BEL is actively involved in the process to generate and pursue business leads and provide innovative and cost-effective solutions to the customers.

Wherever required BEL is also in discussions with various stakeholders for collaboration to enter and hold a strong position in the identified markets. Also, BEL has opened a marketing office in Vietnam and is in the process of opening marketing offices in Myanmar, Sri Lanka, Oman, USA and Singapore. These countries are strategically located with a focused approach towards the enhancement of export.

BEL has been visiting customers on a periodic basis to understand their requirements, acquisition process and to establish long-term customer relationship for enhancing export business.

Countries of Southeast Asia, SAARC, African countries, Middle East, CIS and Latin American countries are the major markets for export of BEL Products and systems. The identified products/systems are Missile Systems, HF / VHF / UHF Communication equipment, Switching equipment, Coastal Surveillance System, Naval Surveillance Radars, Weapon Locating Radar, Sonars, Fire Control Systems, Opto-electronic products like Eye-Safe Laser Range Finders, Night Vision Devices and components.

Agencies