BEL open to more acquisitions

On BEL's radar is a hi-technology R&D and production unit to round out its own capabilities in supplying the Indian armed forces, its main customer, with cost-effective solutions, from phased array radars to night-vision equipment. Telecom equipment for civilian use may also be another area that BEL might venture into, Gopala Rao, BEL's CMD told reporters here.

This year, the firm will start with the "Professional Ferrites" unit of Delhi-based Central Electronics Limited (CEL), a top state-run scientific research lab. BEL has signed an MoU with CEL to buy its ferrite core production unit. The unit is particularly attractive to BEL as the cores are used to make phase control modules (PCM), used in the phased array radars that BEL makes, sources said.

BEL collaborated with a defence lab here, the Electronics and Radar Development Establishment (LRDE), to build these modern sophisticated radars that are fast replacing more conventional radars. "The phased array radars are superior in performance," BEL's scientists said. And CEL's technology, gives BEL a chance to make the radars at lower cost.

Ferrites are iron compounds with specific magnetic properties that allow them to be used for a host of electronic and power applications. That the cores lose little power due to 'eddy currents', whorls of current that lead to energy loss, make them even more attractive.

CEL is a technology & production enterprise of the Department of Scientific & Industrial Research (DSIR), Ministry of Science & Technology, Government of India. It was established in 1974 to develop core competence in the areas of renewable energy systems and new generation electronic equipment, says CEL's website.

Today it is a pioneer in the country and a leading manufacturer in the world for Mono Crystalline Silicon Solar Cells/Modules.

It is also the first company in India in the development and manufacturing of Professional Ferrites and Piezo Ceramics, the website says. Scaling up CEL's ferrites technology will save BEL a lot of money in making its radars.

BEL sources said, "In fact our demand for these cores is outstripping the supply."

Be it the "weapons acquisition radar or the Rajendra central acquisition radar, up to 5,000 PCMs are required in each radar." BEL will take over the unit and relocate it lock, stock and barrel at Ghaziabad, where it has one of its own eight units, and "scale up operations to meet the demand".

The cost of the acquisition was not revealed, but BEL officials said "whatever has been lined up this year, we will meet them out of our own resources." BEL has cash and cash equivalents of some Rs 1,200 crore, as on March 31, the officials said.

Gopala Rao, BEL's CMD said, the firm was not looking at acquisitions abroad yet. "Overseas, we are looking more at joint ventures," he said. BEL itself invests between 4-6 per cent of its revenues in R&D each year. "As you can see, with increasing revenues, the money we spend on R&D is also increasing," Rao says.

"What we will do, Rao says, through acquisitions and joint ventures, "is consolidate our position in various technologies and reduce costs." Last year, "We were able to reduce our operational costs by some Rs 150 crore." This year also we will do it," he says.