Bangalore: State-owned defence electronics firm Bharat Electronics Ltd, or BEL, has sought a detailed business plan from KPMG Advisory Services Pvt. Ltd, the consultant it hired last July to draw up a strategy to double its revenues by 2012.
KPMG has already identified homeland security and modernization of railways as new businesses for Bangalore-based BEL to enter.
“They have to give us detailed project reports, identify products and technology (in both homeland security and railway modernization),” said I.V. Sarma, director of research and development at BEL.
“In 2009-10, these two will be new business areas for us,” he said. BEL expects its revenues to touch Rs10,000 crore by 2012. In 2007-08, it earned Rs826.7 crore on revenues of Rs4,100 crore; BEL expects revenues to grow by 13% to Rs4,560 crore this fiscal.
Revenue-oriented: BEL employees test voting machines in Bangalore. BEL hired KPMG last July to draw up a strategy to double its revenues. Namas Bhojani / Bloomberg
A spokesman for KPMG, which has three months to submit the plan, declined to comment citing client confidentiality. “Our strength is in electronics and radars that could be modified for civil(ian) use. In railways, we have asked them (KPMG) to look at areas like signalling, routing and tracking,” Sarma added.
“This should generate good revenues in two-three years,” he said, but didn’t quantify how much BEL expects to earn from the new businesses. “For purely defence focused companies such as BEL, it makes business sense to expand their product profile into related businesses which have synergy with their existing skills and installed technical base such as civil security, communications and other civil end markets, with an aim to de-risk and increase revenues with improved bottom lines,” said Ratan Shrivastava, director of aerospace and defence at researcher Frost and Sullivan. “The railways modernization opportunity is huge and the work has just started. This would have possibly driven BEL to enter this business,” said an analyst who tracks defence at a Mumbai brokerage. He did not want to be identified. On Monday, BEL and Bharat Heavy Electricals Ltd, or Bhel, are set to announce an equal joint venture to make polycrystalline silicon, or polysilicon, a material used to make solar power panels. The unit will be set up in Bangalore.
A BEL spokeswoman declined to comment on the joint venture.