BEML aims for Rs 900 cr capex till FY25, re-enters building equipment space

BEML has outlined a capital expenditure of Rs 900 crore till FY'25 and re-entered the construction equipment market after a hiatus of nearly five years, aiming to capitalise on the Rs 45,000 crore market opportunity.

The company, formerly Bharat Earth Movers Limited, recently underwent a significant business restructuring, establishing 11 strategic business units (SBUs) and two micro business units to drive sustainable long-term growth.

As part of this restructuring, we have re-entered the construction equipment business, focusing on higher capacity products to tap into the massive Rs 45,000 crore market, Shantanu Roy, Chairman and Managing Director of BEML, told reporters on the sidelines of the 17th Global Mining Summit organised by the CII.

 

BEML's earlier exit from the construction equipment space was due to intense competition from imported products.

Roy, however, explained that the company is now targeting higher-capacity equipment, such as 20-30 tonne excavators and dumpers, where competition from imported products is less intense, unlike the sub-10-tonne segment.

The restructuring is expected to generate a compound annual growth rate (CAGR) of 20 per cent and improve the company's Ebitda to 17-20 per cent.

We expect each SBU to contribute at least Rs 1,000 crore, and micro SBUs to generate Rs 500 crore each, Roy added.

In the current fiscal year, the construction equipment division is projected to achieve a turnover of Rs 300 crore.

BEML has allocated Rs 900 crore in capex over the next two fiscal years to modernize its facilities, invest in new technologies, and expand its manufacturing capacity. This investment will focus on futuristic technologies in defence and infrastructure sectors, as well as advancements in artificial intelligence (AI), Internet of Things (IoT), and automation.

The company is also set to roll out Blue Sky research, a type of scientific exploration driven by curiosity and aimed at advancing scientific knowledge without immediate commercial application.

BEML's growth plan also includes increasing its R&D spend from the current 2 per cent to 5 per cent in the near future, with a goal of reaching 7 per cent of its topline.

The company reported a topline of Rs 4,054 crore in FY'24, and a net profit of Rs 283 crore.

This strategic restructuring aims to streamline decision-making, accelerate R&D, and bolster revenue generation, positioning BEML for significant growth in the coming years.