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BEML Ltd.

BSE: 500048 Sector: Engineering
NSE: BEML ISIN Code: INE258A01016
BSE 12:46 | 28 Jul 1295.00 -9.90
(-0.76%)
OPEN

1308.95

HIGH

1309.95

LOW

1279.85

NSE 12:39 | 28 Jul 1294.70 -12.40
(-0.95%)
OPEN

1309.00

HIGH

1311.00

LOW

1280.30

OPEN 1308.95
PREVIOUS CLOSE 1304.90
VOLUME 6645
52-Week high 1544.25
52-Week low 584.20
P/E 72.10
Mkt Cap.(Rs cr) 5,392
Buy Price 1295.00
Buy Qty 20.00
Sell Price 1295.35
Sell Qty 6.00
OPEN 1308.95
CLOSE 1304.90
VOLUME 6645
52-Week high 1544.25
52-Week low 584.20
P/E 72.10
Mkt Cap.(Rs cr) 5,392
Buy Price 1295.00
Buy Qty 20.00
Sell Price 1295.35
Sell Qty 6.00

BEML Ltd. (BEML) - Chairman Speech

Company chairman speech

DearShareholders

It is an honour and privilege to present the Annual Report for FY 2019-20. FinancialYear 2019-20 has been a challenging year with weakening macro-economic conditions slowingmarket growths and finally COVID-19 outbreak and containment measures towards the end ofthe year. Against this backdrop your Company has put up a reasonably good performance. Ion behalf of the Board of Directors present to you the Company's Annual Report for thefinancial year 2019-20 for your consideration and adoption at the ensuing Annual GeneralMeeting.

Performance Highlights

Your Company has realised a revenue of Rs.3029 Crs. during 2019-20. On the Defencefront your Company has achieved sales of Rs.431 Crs. with an Defence Turnover overprevious year. Mining & Construction Business achieved sales of Rs.1493 Cr. asagainst Rs.1640 Crs. during 2018-19 Rail & Metro Business group achieved sales ofRs.1105 Crs. as against Rs.1495 Crs. during 201819. The negative growth in manufacturing& Capital Goods Sectors and disruptions in supply chain impacted both the businessverticals. PAT stood at Rs.68 Crs. as against Rs.64 Crs. during 2018-19. During the yearRs.3690 Crs. worth orders have been booked. The Order Book of your Company as on 1stApril 2020 stood at Rs.9795 Crs. highest ever as against Rs.9125 Crs. in the previousyear a Highest ever growth of 7%. Employee strength went down by Book (8%) 583 from 7185to 6602 while VoP per employee increased to Rs.50 lakhs by adopting a System IntegrationModel through increased outsourcing. Value added per employee went up to Rs.22 lakhs asagainst Rs.21 lakhs in the previous year a jump of 4%.

Competition

Amidst stiff competition 85% of sales was achieved from orders obtained throughcompetition mode. Your Company maintained a major market share in Dozers and Dumpersmarket of Mining & Construction equipment. Your Company is the only Indian PSUmanufacturing State-of-the-Art Metro through Cars competing with Compton Global Playersand has market share of over 45% in Metro segment. Company has bagged order for over Rs.500 Cr. for supply of Track Width Mine Ploughs to the Army.

Research & Development

During the year Company designed & developed products such as BE1000-1 HydraulicExcavator BE210 Hydraulic Excavator BD155 Bulldozer with CLSS hydraulic systemArtificial Intelligence (AI) based products viz. Predictive maintenance of Miningequipment through AI based big data analytics and Machine learning algorithms andSleep/Fatigued operator alert system on Mining equipment. In Defence business productssuch as AI Powered Medical Health Diagnostic System (MHDS) Medium Bullet Proof Vehicle(MBPV) Mark II Mobile Standby Command Post Vehicle (MSCP) and Mounted Gun System (AK630)were developed. Design and development of Standard Gauge Catenary Maintenance Vehicle 6car train set of BMRCL 42 cars contract deployment into revenue service of Kolkata Metro(E-W) train sets after Safety clearance and successful completion of the Oscillationtrials of 8W DETC and clearance for bulk production was obtained in Rail & Metrobusiness.

Towards protecting the Intellectual property of the Company BEML Innovation Cellsucceeded 70 in filing 155 IPRs since IPR Applications setting up including 70 filed IPRsduring 2019-20 covering innovations in product design manufacturing and operations.Eight patents have been awarded so far. During the year patent was awarded for"Radio control system for clutch control geared dozer".

Company has spent an alltime high of Rs.107 crores on R&D during 2019-20; about3.42% of sales turnover. 68% of sales turnover achieved was from in-houseR&D developed products.

Self-Reliance

Your Company has achieved indigenization levels of over 90% in the mainline Mining& Construction products and Rail coaches & EMU's over 80% in High MobilityVehicles and over 65% in Metro cars. In line with the clarion call of the Hon'ble PrimeMinister for 'AtmaNirbhar Bharat' action plans have been drawn to accelerateindigenization. Your Company is working towards 'ZERO IMPORT' policy and published EoIsfor indigenous development of items being imported. Development orders have already beenplaced for 276 items and efforts are on for indigenous development of balance items.

Your Company launched "Make in India" Products 150T & 190T Dump Trucks180T Electrical/Hydraulic Excavators and 850HP Bulldozer successfully. These biggestelectric drive dump trucks excavator and bulldozer were designed and manufactured for thefirst time in India and are major import substitution products for the Mining sector.After successful trials orders have been received for supply of 5 numbers of 180TElectrical Excavators 7 numbers of 150T and 8 numbers of 190T high end dumpers and areunder execution. Also trial-cum sale order was received from M/s. CIL for 2 nos. of 850HPbulldozers and 1 no. of 180T Hydraulic excavator.

Indigenously Designed & Developed Arjun Armoured Repair & Recovery Vehicle inassociation with M/s. CVRDE has undergone trials and further orders are expected whichwill result in substantial FE savings for the Country.

Design & Development of Metro car for Kolkata Metro Rail Corporation Limited wassuccessfully completed and all 14 train sets were delivered to the customer. CatenaryMaintenance Vehicle (CMV) was successfully designed & developed and supplied to DelhiMetro Rail Corporation.

BEML has also planned to set up 'Make in India Parks' for indigenous manufacture ofcabins for HMVs through ToT local manufacture of defence spares and propulsions for MetroCars/EMUs through JVs.

To further enhance indigenization BEML invited 'Expression of Interest' formanufacturing and technology partnerships with reputed global OEMs looking to establishand/or expand their supply chains/ manufacturing base in India for the manufacture ofvarious goods and/or service business in the areas of Defence & Aerospace Rail &Metro Mining & Construction Engines and aggregates with the overarching objective of'AtmaNirbhar Bharat'. Positive responses have been received and is under compilation.

Procurement from MSMEs was 25% of the total indigenous procurement.

IT Initiatives

During the year Air GAP network was installed to improve Cyber Security framework.Reliability of Internet connectivity was improved by installing a backup line andaugmenting the bandwidth of existing line to allow for larger traffic. Video Conferencingwas further enhanced by conducting virtual meetings at Board Level and for internalmeetings. Client and Partner interactions as well as recruitment interviews and trainingsessions across multiple locations have also been made virtual resulting in significantcost savings. Paperless office initiative was further enhanced by implementing paperlessmeetings. Online 'File Life Cycle Management' contributed to over 97% of our approvalworkflow management leading to transparency and cycle time improvements. Employeeexperience was improved by implementing workflow enabled processes such as TravelManagement Expense Claim Management Leave Encashment and contactless visitordeclaration forms due to Covid-19 precaution.

HR and Administrative Initiatives

Human Resource Management in your Company has been constantly aligning the HRPractices Policies & Procedures to cater to the business requirements and thechanging needs of the Workforce. Building leadership capability across various levels inthe Organization and creating a robust leadership pipeline has been the focus. Peoplebeing the building block of your Company continuous emphasis is being provided onnurturing retaining developing Human Resources to ensure that the people are 'Futureready'.

Defence & Aerospace

In Defence & Aerospace segment major orders are expected for High MobilityVehicles for various missile launching programmes Recovery vehicles and Bridging systems.Orders are also expected for 50T Trailers Overhauling of Tanks and aggregates AircraftTowing Tractors Aggregates & Structures for National programmes.

Your Company is taking up new design & development programmes to meet theacquisition needs of the Indian Army such as Mine Field Marking Equipment Mk-II HeavyRecovery Vehicles MGS platform with Armoured RHD Cabin Special Trailer for Large Antennaintegration Prime mover for Towing the 70T Semi/Full Trailer Indigenous manufacture ofTWMP for T-90 Tanks Self- propelled mine burrier on HMV Infrared Signature Suppression(IRSS) device for Ships and Variants for Launchers. Your Company is also developingIndia's first High Powered 1500HP Engine for Defence Application.

'Make in India Parks' are planned to be set up by attracting potential partners withniche technology and consequently minimize import dependency by Indigenisation of cabinfor High Mobility Vehicles through ToT and Indigenous manufacture of Defence Sparesthrough JV. This will not only facilitate indigenization of complex aggregates but willalso create employment and exports opportunities.

On Export front your Company is exploring opportunities for supply of High MobilityVehicles Bridging Systems (Sarvatra PMS) Crew protection vehicles AI based MedicalHealth & Diagnostics Systems (MHDS) for friendly neighboring countries and othercountries under Indian Line of Credit.

In Aerospace segment your Company is supplying structures and aggregates for variousMissile and National programmes. Also plans are afoot for supply of various aerospacecomponents and parts for global requirements from its newly established facilities atBengaluru. Possible tie-ups with renowned OEMs are also underway and will help in addingrevenue and propelling its growth.

Rail & Metro

In Rail & Metro segment your Company has planned to develop products with improvedtechnology like driverless metro cars (UTO - Unattended Train Operation) for Mumbai Line#2 and Line #7. UTO cars are being designed and developed in the country for the firsttime. Supply of Driverless Metro Car for Mumbai Metro will start from FY 2020-21. R&Dis working with IIT Kharagpur for Bogie design under the Uchathar Aavishkar Yojana (UAY).R&D has planned to develop medium/high speed bogies with this collaboration.

Plans are already put in place for Indigenous manufacture of propulsions for MetroCars/EMUs through JV. Your Company is pursuing tie- ups to cater to the requirement ofupcoming Semi High-Speed Rail Medium/High speed Coaches/LHB Coaches.

Further Metro Rail is extending to Tier-II cities in the Country. Light Rail Metro isalso catching up as a revenue line which is expected to emerge from tier-II & tier-IIIcities. Your Company is optimistic about getting orders for upcoming Metro Car projects.

Maintenance equipment requirements are also increasing for Overhead Inspection CarsTrack Laying Rail Grinding & Track Cleaning Machines.

Your Company has continued its journey in the streak of Maintenance equipment andbagged Orders for manufacturing and supply of 10 sets of Rail Grinding Machines.

Mining & Construction

On Mining front your Company has received orders for Indigenously Designed &Developed High end Excavators & Dumpers worth Rs.450 Cr. and will be executing duringFY 2020-21. Further orders are also expected for these equipment. These biggest electricdrive dump trucks excavator and bulldozer were designed and manufactured for the firsttime in India and are major import substitution products for the Mining sector.

Your Company has also received Trial-cum-sales order for supply of IndigenouslyDesigned & Developed 180T Hydraulic excavator and 850 HP Dozers. You Company is alsoworking on design & development of 240T Dump Truck and 21 Cum. Rope Shovel.

With growing demand for coal production in India coal companies are planning forhigher capacity opencast mining projects; which obviously requires deployment of highercapacity mining equipment with latest technology.

Towards embarking on new technologies your Company has developed 'ArtificialIntelligence (AI) based products viz. Predictive maintenance of Mining equipment throughAI based big data analytics and Machine learning algorithms and Sleep/Fatigued operatoralert system on Mining equipment. These systems are designed to help improve productivitymaximize uptime and make it easy to manage the health of the equipment and safety ofoperator. Further Autonomous Dozer project is under development.

Exports

On export front strategies are being aligned with global dynamics along-with focus onmarket expansion and market penetration. In order to increase exports your Company hasdrawn strategies to export Defence equipment and Rolling stock in addition to Mining &Construction equipment through widening BEML's Distributor Network setting up officesabroad Joint Ventures EXIM bank opportunities etc. With our leadership position in thedomestic market for rolling stock for Metro applications we are now focusing on export ofrolling stock to the neighbouring countries and with the support and focus of GoI onDefence exports we are targeting exports under defence lines to friendly countries.

Corporate Governance

Your Company always strives to attain highest standard of Corporate Governance practiceand is complying with Government Guidelines on Corporate Governance framed by Departmentof Public Enterprises (DPE) for CPSEs in letter and spirit. A report on CorporateGovernance compliances has been made as part of the Board's report. Your company has beengetting "Excellent" rating from DPE for complying various norms of CorporateGovernance. Your Company has established systems and procedures to ensure that its Boardof Directors is well informed about the policies of the Company to enable them todischarge their responsibilities and to enhance the overall value of all stakeholders.

Vigilance Initiatives

Several vigilance activities were carried out in a holistic manner covering preventiondetection and enforcement viz. stores inventory management Scrutiny of TA/DA &Medical reimbursement claims scrutiny of Annual Property Returns on-line vigilanceclearance on-line submission of Annual Property Returns. Recently Vigilance Departmentwas accredited with ISO 9001:2015 QMS certification.

CSR & Sustainable Development

CSR has been synonymous with your Company's core businesses. Your Company's spirit ofcaring and sharing is embedded in its CSR & SD Policy.

In the preface of outbreak of novel Corona Virus COVID-19 and to support this criticalphase of Social and Economic crisis One day Salary of all Executives & Employeesamounting to '145 Lakhs and Twenty One days salary of CMD and Functional Directorsamounting to '9.93 Lakhs was contributed to Prime Minister's National Relief Fund. YourCompany has also contributed '50 lakhs to PM CARES Fund for the above purpose.

Your Company during Lockdown has carried out activities like free supply of foodpackets and drinking water daily to the needy people in nearby villages/areas in andaround our factory premises located at KGF Bengaluru Mysuru and Palakkad. Further morethan 14000 facial cloth masks made voluntarily by BEML Ladies Club and other associationswere distributed.

87% of energy requirement of your Company was met through "GreenEnergy"projects viz. 87% 23MW Windmill Projects Green and 250KWp Solar Power Energyresulting in mitigation of 24037 tons of carbon during the year 2019-20.

Customer Satisfaction

Your Company has initiated various measures for availability of Spare Parts andserviceability 24x7 to ensure reliability of supplied equipment and provide highestcustomer satisfaction.

Customer experience was further enhanced by implementing App based CustomerRelationship Management System (BEML CARES) that can be used by our service engineers andcustomers through hand held device from remote locations.

Awards

Your Company has achieved many accolades and awards and a few of them are :

• Received "SKOCH Award" under 'Corporate Excellence Gold Category' and"SKOCH Order of Merit" Award for design & development of Armoured Repair& Recovery Vehicle and Metro Cars for KMRCL.

• 3 Teams form BEML received 3 'Gold Award' in ICQCC -2019 International QualityCircle Competition.

• 'Cost Reduction in BH60M Dump Truck components by process improvements &Cycle Time Reduction'

• 'Performance Improvement in BG605 - Motor Grader Transmission' and

• 'Elimination of Auto Obstruction Detection Error in Metro Passenger SaloonDoor'.

• Bestowed with Equipment India Awards under two categories best seller in rigidDump Truck and best seller in Crawler Dozer for the year 2018 at a function held at NewDelhi.

• BEML Palakkad Complex has won the 'Kerala State Energy Conservation Award 2019'at a function held at Thiruvananthapuram.

• Bagged Governance Now 6th PSU Award for its achievement and commitment to Raisethe Standard in the Public Sectors.

• Honoured with 'Research & Innovation and Digital PSU Award' by 'GovernanceNow' for outstanding contribution.

Acknowledgements

Before I conclude I would like to thank the Government of India the Ministry ofDefence and in particular the Department of Defence Production PMO Ministry ofRailways MoHUA MMRDA NITI Aayog and other allied Administrative Departments of theGovernment of India in steering the Company for its constant support and encouragement.

I wish to take this opportunity to thank all my fellow Directors on the Board for theirinvaluable guidance and support rendered for running the operations of your Company.

I would like to extend my grateful appreciation to all Unions Associations Employeesand Executives for their untiring efforts and contribution. I am also thankful to ourvaluable customers suppliers and other stakeholders for their trust and support.

Through this message I also assure every stakeholder that your company is wellpositioned to weather the storms ahead and take advantage of opportunities that come up toacquire new capabilities and gain market share. Our whole-hearted commitment and effortstowards creating a more self-reliant ecosystem within the country would add more value forour shareholders. With renewed vigour great confidence and relentless determination welook forward to an exciting future ahead.

Sincerely

Dr. Deepak Kumar Hota

Chairman and Managing Director.

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