BEML : Transcript of Kotak Securities Held on 27.06.2023

TRANSCRIPT - KOTAK SECURITIES LIMITED

SYLVIA

Sir you're on mute.

SASI K

You said we should start the mee ng.

SYLVIA

Oh, yes. If we can just begin the mee ng. You know, few one or two people would be joining in a bit later. But at least we can begin the mee ng. We have right now Mr. Balachandra Shinde from Kotak Life insurance. So, we can begin with it. And we have one or two guest joining in a bit. So instead of wai ng, we can at least start with opening remarks.

ANIL J

You can make the presenta on. Please start the presenta on first.

SASI K

Okay, I'll start with the presenta ons.

Whether the PPT is visible?

BHAL

Ya it's visible

SASI K

This is a disclaimer.

This slide shows the evolu on of products of BEML from the me of incep on in 1964 ll now, when we have introduced major products in the market.

The company was Incepted in 1964, May on 11th and it started with rail coach manufacturing unit at Bangalore. Then we moved onto earth moving equipment Division at "KGF" Kolar Gold Fields in 1967 and in 1986 we have ventured into manufacturing of high mobility vehicles in collabora on with Tatra of Czech Republic.

In the year 1987, we started manufacturing BMP transmission. In 2000, Armoured recovery vehicles ARVs and in

2003 we started the manufacture of first metro cars for Delhi Metro Corpora on in consor um with ROTEM of Korea. In 2014, some of the Missiles aggregates we have started and in 2019 India's biggest mining equipment 1800 Ton Excavators and 205 Ton Dumpers we have introduced in the market, in 2020 some of the AI features we have incorporated on our Equipment and in 2021 driverless metro which we are supplying to Mumbai metro.

We started a project on UAV in e-up with IIT Kanpur in 2022 and in 2023 Rail Grinding Machines we have supplied to LORAM U.S.A. for delivering to Indian Railways that project is in progress.

Then this is BEML's Network all over India. You can see the four manufacturing units on the map. We have four manufacture units, three in Karnataka and one in Kerala.

In Karnataka, we have one in KGF, one in Mysuru and the other in Bengaluru, and the fourth one is in Palakkad, which is in Kerala, we have 12 regional offices all over India and 15 district offices and two different Spares Division and have got seven ac vi es centres.

As you can see, it is spread all over India.

These are our business ver cals.

There are three business ver cals Mining and Construc on, which contributes around 50% of our turnover, Rail & Metro ver cal, 27% of our turnover in last year came from Rail & Metro and Défense and Aerospace which contributed 23% percentage of our turnover in FY23.

Equity we have 54% holding by government of India and 46% by others. We are a Mini Ratna category one company and we serve the core sectors of economy.

BHALCHANDRA

So, one ques on I but it is really quite a few things like that. seriously client What you have to explain

What will be orderbook

SASI K

We will come to order books later sir Can I go through my presenta on?

BHALCHANDRA

Yeah, Sure - Sure, Yeah,

SASI K

Thanks. These are the major products which we are manufacturing, some of them are High Mobility Vehicles, passenger coaches and treasury vans, which are supplied to Indian Railways.

These are the major accomplishments of BEML. In Defence ver cal ll now we have supplied 8800 High Mobility Vehicles, 350 ARVs that is Armoured Recovery Vehicles, 3200 Trailers and Military Wagons and six sets of Pontoon Bridge we have supplied ll date.

In Rail & Metro segment we have supplied 18,000 Rail coaches and 900 Electrical Mul ple Units and 8082 Metro Cars in India. Mining and construc on segment has supplied 33,000 mining and construc on equipment as of date and 28,000 engines. Engines we manufacture for fi ng in to our equipment. These Engines are manufactured at Engine factory in Mysuru. In export front, we have exported to 70 countries' totalling to 5950 crores, which includes deemed exports which we have supplying to some of the projects approved as deemed export projects in India.

These are our global presence. We have exported ll date to 70 countries. You can see mostly in all con nents we are there except Australia. Export turnover in last four years is given in the table below. In 19-20 we were at Rs 62 crores. In 22-23, our export figure has gone up to Rs 830 crores Including deemed exports.

This is our Indigenisa on ini a ve.

You can see in the giant wheel, that water sprinklers we are at 97% percentage Indigenisa on level. Dumpers 95%, in Excavators it is 92% and the lowest is in metro cars which is at 66%. The lowest in metro is because of the propulsion which we con nue to import from Japan.

This is the shareholding pa ern. As on 31st March Government of India held 54 percentage, mutual funds 17.75% and it goes on.

These are the few few highlights of BEML in FY23 compared to previous three years. The net worth if you can see in 19-20, we were at Rs 2257 Crs and in 2023 we were at 2395 crores. That is Rs 88 crores more than the last year.

On Working Capital front, we have brought it down in last year because we had be er collec on in last year compared to previous years. Manpower wise, we are at 5197 numbers which was 6602 in 19-20. There is considerable reduc on, it is mainly because of normal separa on which happens in our company due to superannua on.

EBTIDA wise we are at 10.13% percentage last year we were at 7.75% percentage. there is a growth of EBTIDA in last year.

Then coming down, through compe on mode, we sell around 73% of products. CSR as percentage of average PBT is more than the threshold limit of 2 percentage and 91% of energy requirement is meet through the Green energy generated by us through our own Wind Mills.

I'll go to next slide. This is the revenue from sale of products and services last year in comparison with previous year. We had a turnover of Rs 3839 crores. The break up is 50% came from MNC i.e., is Mining & Construc on segment, 23 percentage came from Defence segment and 27% came from Rail and Metro segment.

This is the value of produc on. Value of produc on in FY 23 is Rs 3802 crores less than FY22 because, value

produc on goes commensurate with the value of sales. Reason for sales reduc on will be covered during discussions.

This is the order book posi on as on 31st March 23. We had an order book of Rs 8570 crores, which has gone up substan ally subsequently. which we will cover during the interac on.

Gross Margin and PAT. We had a growth of 21% in Gross margin in FY23 compared to FY22. And in PAT, we have grown by 18% percentage in 22- 23.

This is VOP Per Employee & Manpower Strength. Our VOP Per Employee in lakhs is 73 lakhs and manpower wise we are at 5197, that is 7% reduc on compared to previous year. In 20-21 had a strength of 6053.

Collec on wise we did the collec on of 4656 crores during last year. The Debtors have come down substan ally which was at 1861 crores on 31st Mar 2023 has come down to 1237 crores. That is a main reason for reduc on in working capital requirement.

This shows the inventory, Employee and Finance Cost. Inventory is Rs 2061 crores, Employee cost 840 Crs that is around 22% of the VOP. Finance Cost is 46 crores which is less by 3 crores comparing to 21-22.

That's all in my presenta on.

Thank you.

BHALCHANDRA

Right on the prospects, especially on Vande Bharat, High Speed Rail and other Metro Rail. How much is in pipeline wise for next 2- 3 years and how we see the pipeline and what kind of a market share we will have.

ANIL J

See with regard to Vande Bharat recently we got order of ten train sets from ICF. ICF will provide us some aggregate free of cost and we have to design and manufacture or assemble the Vande Bhart 10 train sets, we will supply in another 12 to 13 months, the order we got recently.

ANIL J

And with regard to further orders, further orders are in pipeline. Around 200-train set tender is expected soon from railway board. So, there we will par cipate, which we have par cipated earlier also. But in earlier tender, we were L- 3. This me we are expec ng that we may posi vely get some order of Vande Bharat Train sets.

Orders will come on regular intervals from Railways as they have to replace their exis ng coaches with Vande Bharat coaches. So, those things are in pipeline. And with regard to Metro, recently we got Bangalore metro order of 318 cars, roughly about 3170 Crores of value.

BHALCHANDRA

Hello

ANIL J

Yeah, tell me.

BHALCHANDRA

Yeah, Before going to Metro order sir, In Vande Bharat as you men oned 10 to 15 trains, 10 to 100 trains can you give the value how much will be the value, of the order or how much pipeline value what will be, in Vande Bharat.

ANIL J

In last tender of 200 cars, which already won by RVNL and one Russian firm and BHEL with Titagarh Wagons, the value of that contract is 120 crores order per train set. In the order what we got, ICF will supply some aggregates to us. The value of that 10 train sets order s what we got is approximately Rs 675 crores.

BHALCHANDRA

Okay. Okay, okay. Okay. Done

We can con nue with the Metro. Okay.

ANIL J

Yeah. For Metro recently, we got one order from Bangalore, metro for 318 cars. The order value is Rs 3170 crores. Order or the contract copy we will get I think, by the end of this month.

And another 72 cars, where we stand L-1, is again from Bangalore Metro. So, these two orders already we are L-1 and others order in pipeline are from Mumbai Metro, Chennai Metro and Patna Metro. They are expec ng approximately 700 cars tender. The qty in these tenders will be 700 plus Cars. The value of those tenders will be approximately 7000 crores.

They are in pipeline. So, this is the status of a rail and metro at present. And another one, I think already tender has been out from MRVC, Mumbai Rail Vikas Nigam where they require 232 train set consis ng of 12 bogies or 12 cars, which is approximately Rs 17,000 crores value, which includes some maintenance as well as build-up of their two depots.

ANIL J

So, the tender just now has come. Based on the tender, will decide how to par cipate and with whom we have to par cipate. Those things we have not yet firmed up. So, these are the major tenders in Rail and Metro as on date.

BHALCHANDRA

This 7000 crores here I am checked that will come in what meline are for the Delhi, Mumbai and all these

ANIL J

They are Mumbai Metro Chennai, Patna these three are the major ci es from where these orders will come or tenders will come.

BHALCHANDRA

In how many years, like when in this year or next 1 to 2 years or 3 years' meline, if you can? guess,

ANIL J

We are, we are expec ng those tenders this year itself 2023.

BHALCHANDRA

How much meline it will take and usually get the order. How much meline be expected to the date for that tender of 17000 crores.

ANIL J

Just now tender has come. It looks like by the end of this financial year that is March 24 they may like to finalize the order but it's only a press report.

BHALCHANDRA

It will be shared across the all players or how you think the tender usually will except.

ANIL J

It's a Interna onal compe ve bidding. Indian as well as outside player, the all player will par cipate, mainly in India we will par cipate and may be TITAGARH can also par cipate so players are there.

BHALCHANDRA

These orders will be given to only one player or it will be distributed amongst the players

ANIL J

As per the plain reading of the tenders, It looks like it will go to one bidder only.

Unknown

Will that be total wagons manufacturing.

ANIL J

Yes, manufacturing and supply of rolling stock, maintenance as well as build-up of two depots.

BHALCHANDRA

Okay. And how much will be the maintenance in the part of the order.

ANIL J

Not yet clear because I think two days back only tender has come.

BHALCHANDRA

Okay. Okay. Okay.

BHALCHANDRA

So, over the years strong order book currently, how much order expect over next 2 to 3 years because of the pipeline.

ANIL J

See for financial year 24, we are expec ng that we will be somewhere near 16,000 Crores, because we started with 8570 crores as on 1st April 23 and by the end of the year we are expec ng to reach 16,000 crores worth order and next 2 to 3 years if we are able to get 17,000 in 1 shot, it may go to plus 17,000 crores, if we get all those orders in Rail and Metro.

ANIL J

Roughly 25000 to 26000 corers orders are in pipeline. So, next 2 to 3 years, we may get some orders which will be to the tune of 5000 to 10000 may be possible. But it's a very difficult to predict at present,

BHALCHANDRA

It depends on what kind of opportunity will it be in pipeline.

ANIL J

That's what I told you, see we are expec ng that we may be in one or two orders in this one,because we have to see our capacity also and meline of delivery. So, as I told you, by the end of this financial year, we are expec ng including rail and metro total order of 16,000 crores for this FY 24.