BEML : Transcript of Investor Meet Held on 22.06.2023

In Conversation with BEML on India's Railways and Defence

Manufacturing _ The Ringside View

• Ms. Amisha Vora -- Chairperson & MD, Prabhudas Lilladher Pvt. Ltd.:
• Extremely thank you for taking out this time for us and all our clients, and I will start with a very basic question and that is, I was just seeing your last five years of order intake as well as opening order book. So, as far as say March 23 order book is concerned, it's not the highest in last five years. You all have had better order book, better order inflow also, and now as I see a lot of things which were not firing in India particularly railways, metro orders, and beyond that the defense which has all started firing. So, do we think I mean do we see that this year that is FY23-24 we will see a huge jump in order inflow?
• Mr. Amit Banerjee - Chairman & Managing Director, BEML Ltd.:
• Yeah, it's true, like before that there's a small presentation on the company would your participants like to go through it. We can upload it, maybe 5 minutes on that.
• Ms. Amisha Vora -- Chairperson & MD, Prabhudas Lilladher Pvt. Ltd.:
• Most certainly, definitely.
• Mr. Amit Banerjee - Chairman & Managing Director, BEML Ltd.:
• Our CGM Finance is there, Mr. Sasi Kumar. Sasi - are you ready with the presentation.
• Ms. Amisha Vora -- Chairperson & MD, Prabhudas Lilladher Pvt. Ltd.:
• Mr. Sasi, welcome. You are on mute. Amit, please allow him to upload and give him screen share rights.
• Mr. Sasi Kumar K - Chief General Manager (Finance), BEML Ltd.:
• Thank you. Good afternoon. I'm Sasi Kumar. I'll share the presentation, just a second.
• Ms. Amisha Vora -- Chairperson & MD, Prabhudas Lilladher Pvt. Ltd.:
• Sure.
• Mr. Sasi Kumar K -- Deputy General Manager (Finance), BEML Ltd.:
• Can I start Sir?
• Mr. Amit Banerjee - Chairman & Managing Director, BEML Ltd.:
• Yes, please. Go ahead.

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• Mr. Sasi Kumar K -- Deputy General Manager (Finance), BEML Ltd.:
• Thank You sir. This is our disclaimer.
• Ms. Amisha Vora -- Chairperson & MD, Prabhudas Lilladher Pvt. Ltd.:
• Please go ahead, Sasi.
• Mr. Sasi Kumar K -- Deputy General Manager (Finance), BEML Ltd.:
• This is a general statement.
• This is how BEML is spread in India. We have four manufacturing complexes; one in Kolar Gold Fields, one in Bangalore, it is called as Bengaluru Complex from our corporate office around 9 kilometers away, another in Mysuru and the fourth one is in Palakkad, which is in Kerala. There are 12 regional offices spread across India. It is represented in green. In New Delhi there is one, like that there are 12 regional offices. We have 15 district offices and two defence spares division and seven activity centers. You can see from down South from Madurai to Leh on the North and from East from Itanagar to Ahmedabad in the West, we are spread out across India. This is one of the major strengths of BEML.
• We have three business verticals; defence and aerospace, mining and construction, and Rail and Metro. As shown among these three verticals, defence vertical has contributed around 23% of our turnover in 22-23, Mining and Construction has contributed 50% and from Rail and Metro has contributed 27%. Equity base wise Government of India holds 54% and others hold 46%. We are a Mini Ratna Category 1 Company, incorporated on 11th of May, 1964. Basically, we were a division of HAL ie; Hindustan Aeronautics Limited, then it got spinned off as a separate company. We serve the core sectors of the economy, viz., defence and aerospace, coal, mining, steel, cement, power, irrigation, and others.
• I'll go to the next slide. These are our some of major products of BEML.
• Major accomplishments of BEML. Till date, we have supplied around 8800 numbers of High Mobility Vehicles, 350 ARVs, 3,200 trailers and military wagons. Pontoon Bridge System we have supplied till now 6 sets. Coming to Rail and Metro, we have supplied 18,000 coaches till now - and 900 EMUs means Electrical Multiple Units and 1,800 metro cars, around 48% of metro cars which are running in India are made in BEML factory at Bangalore Complex.
• Mr. Anil Jerath -Director - Finance, BEML Ltd.:
• Sasi just a minute. Madam, you have to accept our Director Mining. I think he is waiting in the lobby.

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• Ms. Amisha Vora -- Chairperson & MD, Prabhudas Lilladher Pvt. Ltd.:
• Sure. Amit, will you please do the needful right away.
• Mr. Amit Anwani -Research Analyst, Prabhudas Lilladher Private Limited:
• Yes, ma'am. Thank you, Sir. He will do it.
• Mr. Sasi Kumar K -- Deputy General Manager (Finance), BEML Ltd.:
• Can I continue?
• Mr. Amit Banerjee - Chairman & Managing Director, BEML Ltd.:
• Yeah, Sasi, go ahead.
• Mr. Sasi Kumar K -- Deputy General Manager (Finance), BEML Ltd.:
• Then, the yellow color shows the mining and construction segment, around 33,000 M&C equipment we had supplied till date and 28,000 engines which are manufactured in our engine factory in Mysuru. Coming to exports, till now we have exported to 70 countries, totaling to 5,950 crores. This includes deemed exports which we are supplying to the projects eligible as deemed exports within India.
• Then, these are our global presence all over the world. Total 70 countries, the last one we exported was to Cameroon; where we had supplied number of mining equipment. You can see in the table below. Our export figures in 19-20 was Rs 62 crores, in 22-23 our export figure total is 830 crores. More or less in all the continents we are there. In Australia, we had participated in an exhibition, we are yet to get an order from Australia region.
• These are our indigenization efforts which we are continuing to do. We have constant efforts on indigenizing our products in line with the Atmanirbhar Bharat vision of our honorable Prime Minister. Maximum indigenization we have done is on our Water Sprinklers, which is 97%. Dumpers with 95%, Excavators we have done till now 92%, then Motor Graders 90. In High Mobility Trucks, we are at 95%, you can see the least one is in Metro Cars. Metro Cars, our indigenization level is 66%, mainly because in Metro Car the major component is the propulsion. Propulsion is not made in India, we import the propulsion from Japan.
• Next, these are the shareholding pattern, Government of India holds 54.03% balance by others as shown.
• These are our some of the key highlights of BEML in last four years. 2022-23 figures as on end Mar 23. Our net worth now is Rs 2,395 crores. Last year we were at 2,307 crores Rs 88 crores of net worth we could add in 22-23. Working capital is Rs 2,480 crores, in - last year it was Rs 2,822 crores. It has come down to 2,480 crores because some of the old dues we could collect in last year, our working capital requirement had come down in last year. Manpower, we are at 5,197. We were at 6602 in 19-20. There is a redirection in manpower, it is mainly due to normal separation of people

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throughout the year it happens. Around 400 to 450 people retire every year in our company. We also add manpower, but that is not commensurate with the separations, to the extent of our requirement only we recruit people, so our manpower strength had come down.

• EBITDA percentage, this was one of our major challenge our CMD also mentioned in the last year's investors meet. We wanted to achieve 10% of EBITDA, which we could achieve last year. Previously, it was 7.75%. Some of other key highlights are R&D expenditure as percentage of sales is 1.95%. Then sales through competition mode, unlike other public sectors in India where they get most of the orders from Government of India through noncompetition mode, we get our 73% orders through competition route only. Outsourcing as percentage of VoP, we do 48% of our value of production through outsourcing mode and the CSR as a percentage of average 3 years PBT is 4%, it is above the threshold value of 2% of average 3 years PBT.
• Green energy, that is through windmill. 91% of our energy requirement is met through Green energy generated by us through Wind Mills.
• Sir, I was told DM Sir couldn't join, He's waiting in the lobby.
• Ms. Amisha Vora -- Chairperson & MD, Prabhudas Lilladher Pvt. Ltd.:
• Amit?
• Mr. Amit Anwani -Research Analyst, Prabhudas Lilladher Private Limited:
• Ma'am, I think it is automatic join, so lobby
• Ms. Amisha Vora -- Chairperson & MD, Prabhudas Lilladher Pvt. Ltd.:
• No, it is not. It cannot be automatic joining. You have to accept when it is on the panel.
• Mr. Amit Anwani -Research Analyst, Prabhudas Lilladher Private Limited:
• Okay. I'll just check again.
• Ms. Amisha Vora -- Chairperson & MD, Prabhudas Lilladher Pvt. Ltd.:
• Hold on.
• Ms. Amisha Vora -- Chairperson & MD, Prabhudas Lilladher Pvt. Ltd.:
• I've informed, give me one more minute please. We'll do the needful. Go ahead so that we can start the question answer. Please go ahead, Mr. Sasi.
• Mr. Sasi Kumar K -- Deputy General Manager (Finance), BEML Ltd.:
• Sure. This is the breakup of our turnover last year. Revenue from Sales of products and services. In 22-23, our sales figure was Rs 3,839 crores, break up is 50% from M&C, 23% from Defense segment and 27% is from Rail and Metro segment.

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Comparing to Previous year our Turn over in 2022-23 bit less mainly because of some of the products we could not supply because customers didn't want us to supply the items at that point of time. That will get compensated in current year.

• Then, this is the value of production figures. There is a reduction in value of production in 22-23 comparing to last year which is commensurate with value of sales.
• This is the order book position. As on 31st March, 23, our order book was at Rs. 8,570 crores. This has substantially gone up. Sir will be explaining all that.
• This is gross margin and PAT. You can see, we have considerably grown up in gross margin and PAT, we had an increase of 21% in gross margin and in PAT we had a growth of 18%.
• This is our VoP per employee and manpower strength. We could add Rs 1 lakh per employee last year. We are now at Rs 73 lakh per employee. As already explained our manpower strength is 5,197, comparing to previous year, 7% reduction. These are normal reduction, there's nothing alarming. Based on our order book status, we can ramp up our manpower that is not a problem because lot of manpower we take through contract source also.
• Then these are our collection figures. Last year collection was at Rs 8650 crores. Our debtors have come down, this has been one of the significant achievements in 22-23. Debtors have been a concern for us. Last year we could realize many old debts. So, the debtors' position has come down from Rs 1,861 crores in March 22 to Rs 1,237 crores in March 23.
• This is comparison of inventory, employee cost and finance cost. Inventory wise, we have Rs 2,061 crores. Employee cost we are at 22% of VoP and Finance cost wise we have incurred less Finance cost comparing last year. Though the bank rates have gone up in the market, we could reduce our finance costs because of our better financial management. That's it. Thank you so much. Thanks for listening.
• Ms. Amisha Vora -- Chairperson & MD, Prabhudas Lilladher Pvt. Ltd.:
• Thank you so much. Has he joined? He's waiting to join?
• Mr. Amit Anwani -Research Analyst, Prabhudas Lilladher Private Limited:
• Ma'am, I can see Mr. Shantanu Roy now.
• Ms. Amisha Vora -- Chairperson & MD, Prabhudas Lilladher Pvt. Ltd.:
• Please add him.
• Mr. Amit Anwani -Research Analyst, Prabhudas Lilladher Private Limited:
• Yeah, yeah, he's there.

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